Sub-broker services in securities transactions became taxable only after the statutory amendment, defeating pre-amendment service tax demands.

Services rendered by a sub-broker in relation to the sale or purchase of securities in a recognised stock exchange became taxable only from 10.09.2004, when the statutory definition of stock broker was amended to include such services. The Tribunal followed the larger bench view and held that service tax could not be demanded for any earlier period. The demand for the disputed period was therefore unsustainable, and the appeal was allowed with consequential relief.

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Issues: Whether service tax could be demanded on services rendered as a sub-broker for the period prior to 10.09.2004.

Analysis: The Tribunal noted that the larger bench had already settled the issue and held that services provided by a sub-broker in connection with sale or purchase of securities in a recognised stock exchange became taxable only with effect from 10.09.2004, when the definition of stock broker in section 65(101) of the Finance Act, 1994 was amended.

Conclusion: The service tax demand for the period in dispute was not sustainable and the appeal was allowed with consequential relief.

Ratio Decidendi: Services provided by a sub-broker in relation to securities transactions became taxable only from the date on which the statutory definition was amended to include them.

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