In a recent decision reported in 2007 -TMI - 1628 - CESTAT, NEW DELHI, honorable tribunal has held that:

In the present case, sale and purchase of security in the Stock Exchange is handled only by the main broker and the sub- brokers are only taking the interested buyers to the main broker. Therefore, levy will fall only on the main brokers who handled sale and purchase of security in the stock exchange.

The sub-brokers are not acting as a broker in connection with the sale and purchase of securities in the stock exchange. Their role is like any commission agent in a transaction. The levy under the Heading ("stock broker service") in question is limited to stock brokers and not to commission agents at large. Therefore, levy is clearly not attracted in the case of sub-brokers.

Service tax scope: levy limited to stock brokers; sub-brokers treated as commission agents and not taxable. Service tax for securities transactions applies to the person who executes sale and purchase on the exchange; sub-brokers who only introduce buyers act as commission agents and, not performing exchange brokerage, fall outside the stock broker service levy.