TaxTMI 
TaxTMI 
2014 (4) TMI 588
X X X X Extracts X X X X
X X X X Extracts X X X X
....f Rs. 70,34,801/- (Rupees seventy lakh thirty four thousand eight hundred one only) in respect of the services provided by the appellant's sub-brokers located in Jammu & Kashmir to their clients of Jammu & Kashmir. 2. We have heard Shri B.L. Narasimhan, Ld. Advocate for the assessee and Mr. Govind Dixit, Ld. Departmental Representative appearing for the Revenue. 3. The appellants are a registered member of National Stock Exchange, Bombay Stock Exchange, Depository Participant with National Security Depository Ltd. and Central Depository Service (I) Ltd.. They are providing, inter alia, services of stock broking and are registered with Service Tax Department. 4. The appellants are providing on-screen trading experience to its customers by offering on-line trading platform where the customers can trade across the world by logging in to their self-trading terminal using a secured gateway user ID and password and secondly, off-line trading for clients, who may trade in securities directly from the branches or through phones or tele-calling. The appointed dealers carried out the trading activities on behalf of their clients. For the said purposes, they are issuing Contract Notes ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to recover service tax in respect of DPCs charged by the appellants from their clients as also the service tax in respect of services rendered by the appellants, through their sub-brokers in Jammu & Kashmir, to their clients located in Jammu & Kashmir. As already noted, the Commissioner has confirmed the demand along with interest and penalties in respect of DPCs recovered from the clients and has dropped the demands in respect of the services rendered to the clients located in Jammu & Kashmir. Hence, the present appeals by both the sides. 8. As regards the first issue, the facts are not in dispute. As per the appellants, the DPCs were in the nature of penal interest on outstanding debit balance unpaid by their clients upto a certain period and was used as a tool to recover a minimum settlement money from the clients. The said DPCs were recovered by the appellants by debiting the running ledger accounts of the clients on monthly basis and the customers were being informed through debit notes by mentioning the charges so debited to their running ledger. According to the appellants, such debit notes do not constitute the invoice/bill/challan or a contract note raised against their c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on is finally settled and contract notes are issued. 10. After appreciating the submissions made by both the sides, we find that the dispute to be decided in the appeal is as to whether the DPC collected by the appellants from their clients in those cases where the appellants have already made payments to the Exchange but has not recovered the same from their clients, are required to be considered as a part of the value of the services, so as to levy the service tax in respect of the same. We find that there is not much dispute on the facts. The DPCs are being collected by the appellants only from those clients, who have not paid them well within the time limit period and the appellants being under a legal contract with the Exchange, had to deposit the value of the securities, sold or/and purchased by their clients. As such, the nature of the said DPCs being a penal charge, is established. Where there is no delay in making payments by the clients, no DPC is being charged from them. As such, one thing becomes clear that such DPC is not on account of any stock-broking services being provided by the appellants. In terms of clause 45 of the agreement entered by the appellants with in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d in the amended section declaring that value of taxable service as the case may be shall include certain receipts prescribed by different clauses appearing under section 67. Clause (a) is the relevant clause insofar as that relates to faxable service provided by stock broker and that is under consideration in these appeals. That clause states that securities including the commission or brokerage paid by the stock broker to any sub-broker shall be liable to service tax. Thus, there is no extended meaning of measure of levy even by amended definition of valuation of taxable service. 12.5 Provision of section 67 provides the basis of determine the value of taxable service. No ambiguity persists in section 67 of the Act. No receipt other than commission or brokerage made by a stock broker is intended to be brought to the ambit of assessable value of service provided by stock broker. Charging section in a taxing statute is to be construed strictly. As is often said. there is no equity about tax. If the words used in a taxing statute are clear, one cannot try to find out the intention and the object of the statute [Ref: Govt. of Andhra Pradesh vs. P. Laxmi Devi - 200....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... rule of computation of value of taxable service under section 67 of the Act. The other receipts a stock broker makes are irrelevant for determination of the assessable value of taxable service provided by him . Thus the test is whether a receipt of stock broker is in the nature of commission or brokerage to levy service tax." 11. As is seen from the above, the mandate of Section 67A of the Act is that it is only the commission/brokerage, which is liable to service tax and no other recovery made by the stock-broker can be held to be a part of the value of the service. The Tribunal very clearly observed that the receipts not in the nature of commission/brokerage should not be taxed in disguise. In as much as, we have already held that DPC is not a commission or a brokerage for sale/purchase of securities, as the same is not being collected from each and every customers but is relatable to only delayed payments by some of the customers, there is no justification for inclusion of the same in the value of the services. 12. Apart from the above, we note that the issue stands clarified by the CBEC vide their letter dated 03.08.2011, relating to the DPCs recovered by the stock-broking s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ax would be payable on the entire amount. Delayed payment charges would not be includible in the 'gross value charged' only if these charges are shown separately in the account statement/invoice/bill etc." As is seen from the above, the DPCs recovered separately and shown separately in the invoices/bills cannot be held liable to payment of service tax. Admittedly, in the present case, such DPCs were being recovered by the appellants by issuing separate debit notes to their customers and by debiting the amounts in their running ledgers. As such, the clarification issued by the Board is fully applicable to the facts of the present case. 13. Though we have held in favour of the appellants on merits, we also note that major part of the demand is barred by limitation. Admittedly, the appellants were maintaining all the records showing recover of said DPCs and were reflecting the same in their books of accounts as also in their balance-sheet. The Commissioner has invoked longer period only on the short ground that they have never disclosed the same to the Revenue and said non-payment of service tax is indicative of the assesses intention and motive to evade tax. However, we fai....