Service tax on broker-collected statutory charges excluded where receipts were only reimbursements, not brokerage or service consideration.

Charges collected by a stock broker as demat/depository, transaction/administrative, and VSAP/TWS levies and passed on to stock exchanges or depository participants are not part of the broker's taxable value where they are mere reimbursements and not consideration for an independent service rendered by the broker. Taxable value in a stock-broker service is confined to commission, brokerage, or other receipts actually earned for services provided. Applying this principle and consistent tribunal precedent, the demand was held unsustainable and the impugned orders were set aside.

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Issues: Whether demat/depository charges, transaction/administrative charges, and VSAP/TWS charges collected by a stock broker from sub-brokers and passed on to stock exchanges or depository participants are liable to service tax as part of the broker's taxable services.

Analysis: The charges in dispute were found to be statutory levies or reimbursements collected on behalf of stock exchanges and depository participants, and not consideration for any independent service rendered by the appellant. The valuation of taxable service for a stock broker is governed strictly by the charging and valuation provisions, and only amounts in the nature of commission or brokerage can be brought within tax. On the facts, the Revenue did not establish that these receipts represented the appellant's service charges. The issue was also covered by consistent tribunal precedent holding that such collected charges do not form part of the taxable value.

Conclusion: The charges were not taxable as service tax in the hands of the appellant, and the demand was unsustainable.

Final Conclusion: The impugned orders were set aside and the appeals succeeded, with consequential relief.

Ratio Decidendi: Only receipts constituting commission or brokerage, or other consideration for services actually rendered by the stock broker, can form part of the taxable value; statutory charges collected merely as reimbursements for onward payment to the concerned authority are excluded from service tax.

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