TaxTMI 
TaxTMI 
2013 (2) TMI 328
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....Services " and "Banking and Financial Services". 2.1 During the course of audit of accounts by the officers of Internal Audit Branch of Service tax Commissionerate, for the period January 2008 to May 2008, it was found that apart from collecting brokerage for all their transactions with their clients, they have also collected turnover charges or transaction charges @ 0.0035%/0.0025% of the total value of transaction from their clients through their branches for the services provided to their clients. This amount was paid to the stock exchange for getting the Computer to Computer Link (CTCL) facility from the exchanges, which results in the system getting net worked and the transactions of buying and selling getting effected. Further on verification of their Cenvat documents for the years 2004-05 to December 2008, it appeared that the appellant had availed ineligible credit on the Service tax paid towards employees insurance, food charges and travelling expenses which are not used in providing their output service. This ineligible credit was taken during April 2004 to Dec 2008 and it works out to Rs. 11,36,704/-. It was also noticed that the appellant were availing credit on....
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.... collected from the client belong to the respective stock exchanges and the duty of the appellant is to remit the same to them. (ii) that the appellant is having a contractual agreement with their clients stating that apart from the brokerage that is paid for the purchase and sale of shares and securities on behalf of them, they will collect turnover charges and transaction charges from them as levied by the stock exchange and remit the same to the stock exchanges. Here, the clients are aware of the fact that the said charges are charged by the stock exchanges and the appellant's job is to collect and pay the same to the Stock exchanges as an agent. The appellant does not hold or have any intention to hold the services of stock exchanges. (iii) that the appellant submitted that there is no relation between the Computer to Computer Link Connectivity and the transaction charges. It is nowhere stated in the circular dated 11-12-2000 that the transaction charges are paid for the connectivity purpose. (iv) that the appellant submitted regarding insurance coverage and food charges that though these facilities have been given to the employees as a we....
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....se are to be allowed. In short, it means that prior to budget 2011-12, the above services were eligible input services. (2) None represented the Respondent Department despite intimation. 5. I have carefully gone through the case records and the oral as well as written submissions. The issues to be decided are whether - (i) the amount collected as transaction charges by the appellant is includible in the taxable value or in other words whether the appellant is liable to pay Service tax on the transaction charges or turnover charges collected, (ii) the appellant is eligible for the Cenvat credit availed on Service tax paid towards employees insurance, food charges, subscription/ books/periodicals and travelling expenses, (iii) the appellant is entitled for the credit taken on debit notes issued by their associate company. 5.1 Let me discuss issue wise : (i) Whether the amount collected as transaction charges by the appellant is includible in the taxable value or in other words whether the appellant is liable to pay Service tax on the transaction charges or turnover charges collected : ....
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....ce knows that the goods and services for which payment has been made by the service provider shall be provided by the third party; (vi) the payment made by the service provider on behalf of the recipient of service has been separately indicated in the invoice issued by the service provider to the recipient of service; (vii) the service provider recovers from the recipient of service only such amount as has been paid by him to the third party; and (viii) the goods or services procured by the service provider from the third party as a pure agent of the recipient of service are in addition to the services he provides on his own account. It is not the Department's case that the stock broker had collected any excess amount from his clients and had not paid such amount to the stock exchange. The Pure Agent issue is not under dispute. Therefore, I hold that the appellant are rightly coming under the category of "Pure Agents" and gets exempted from payment of Service tax on that amount. Regarding the allegation, that the turnover charges paid to the exchanges were for getting the connectivity, I find that the same is not substantiated by t....