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of <h1>Tribunal rules in favor of stock exchange subsidiary in tax dispute on V-SAT connectivity charges</h1> The Tribunal ruled in favor of the appellant, a subsidiary of a stock exchange, in a tax dispute regarding penalty charges from sub-brokers and charges ... Demand in respect of V-SAT connectivity - appellant registered as Stock Broker – Held that:- This service is provided by telegraph authority or by a person licensed under Section 4(1) of the Indian Telegraph Act - appellant are not telegraph authority or a person licensed under Section 4(1) of the Indian Telegraph Act - V-SAT connectivity charges being recovered by the appellant from their customers and sub-brokers cannot be treated as charges for lease circuit services - requirement of pre-deposit of service tax demand, interest and penalty is waived - stay application is allowed. Issues:1. Taxability of penalty charges received from sub-brokers.2. Taxability of charges for V-SAT connectivity.3. Validity of service tax demand, interest, and penalties imposed.Analysis:1. The appellant, a subsidiary of a stock exchange, charged penalty amounts from sub-brokers in excess of charges paid to the Bombay Stock Exchange. The department viewed this as extra consideration for taxable services, demanding service tax of Rs. 1,29,763. The jurisdictional Addl. Commissioner confirmed this demand, imposing penalties. The Commissioner (Appeals) set aside the penalty, leading to the current appeal.2. The appellant provided V-SAT connectivity to customers for charges totaling Rs. 68,96,316. The department considered this as consideration for leased circuit services, demanding service tax of Rs. 6,86,292. The Commissioner (Appeals) upheld this demand along with penalties. The appellant contended they were not providing leased circuit services, citing legal provisions and the Mumbai Stock Exchange's role in providing V-SAT services.3. The Tribunal analyzed the definition of leased circuit services under the Finance Act, noting it must be provided by a telegraph authority or a licensed person under the Indian Telegraph Act. As the appellant did not fall under these categories, the charges for V-SAT connectivity were not considered as leased circuit services. Consequently, the requirement of pre-deposit for service tax, interest, and penalties was waived, and recovery stayed pending appeal disposal. The stay application was allowed, providing relief to the appellant.
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