Clarifying that services provided by banks on minimum account balance are not free in nature, revenue officials on Thursday said that the decision to tax such services was taken at the highest level.
"Banks charge penalty on non maintenance of minimum account balance," said the officials.
The officials further added that banks will have to take the court route to plead their case even as department of financial services has asked the revenue department to withdraw service tax notices.
"Service tax demands on banks cannot be withdrawn except through adjudication," said the officials.
More than 20 banks were served with a notice by the revenue department asking the lenders to pay tax that could amount to crores, on 'free services' provided to customers maintaining a minimum account balance.
The show cause notices issued to banks between 2012 and 2017 demanded tax for free services like cash withdrawals from ATMs, cheque books, account statements, internet banking, debit cards and PIN change.