TaxTMI 
TaxTMI 
2018 (2) TMI 569
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.... together for disposal. 2. The appellants herein above are stock brokers registered with various stock exchanges and render stock broking services to their clients. They discharge Service Tax on the commissions received from their clients in rendering stock broking services. Besides, they also collect various charges viz., NSE/BSE transaction charges, SEBI turnover fees, Stamp duty, Depository/Demat charges and Security Transaction charges, shown separately in the respective invoices. However, they do not pay Service Tax on these charges alongwith commission charges received for providing stock broking services to their clients. Alleging that all these charges should form part of the value of the brokerage and commission charges collected from the respective clients/customers, show cause notices were issued for recovery of Service Tax on these charges from the clients with interest and proposal for penalty. On adjudication, the demands were confirmed. Aggrieved by the respective order, the appellants preferred appeals before the Ld. Commissioner (Appeals), who in turn rejected their appeals. Hence, the present appeals. 3. Leading the argument at Bar, the Ld. Advocate Shri P M Dav....
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....in their respective invoices separately and filing the Returns from time to time with the Dept. reflecting their liability of Service Tax on the brokerage and commission received from the customers. Therefore, no fact was suppressed from the knowledge of the Dept., nor mis-declared, accordingly, the demand is barred by limitation. 4. The Ld. Advocate Shri Jigar Shah for the appellants M/s Navkar Share and Sock Brokers Pvt Ltd and M/s Betala Stock Broking Ltd submitted that in addition to the NSE charges, the appellant have also collected Demat charges from their customers and in turn paid the said charges to depository participants like CDSL or NSDL. It is his contention that under the Depositories Act, 1996 such Demat charge can only be levied by the "depository" and as per the definition under the said Act, it is only CDSL or NSDL who could levy such charges. Therefore, following the principles of law laid down in M/s LSE Securities Ltd's case these charges also cannot be part of the value of brokerage and commission charges received by the stock brokers in providing such services. The Ld. advocate also referred to the provision of Sec 67 of the Finance Act before and after amen....
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....t in the present case NSE/BSE charges Demat charges etc., are incurred by the appellant in providing the Stock Broking services, hence its value is to be included in the gross taxable value of stock broking service provided by the appellants. 7. In his rejoinder Ld. Advocate Shri Jigar Shah referring to the subsequent judgment of the Larger Bench in the case of M/s Bhayana Builders (P) Ltd Vs CST - 2013(32)STR.49 (Tri.LB) and the judgment of Hon'ble Delhi High Court in the case of M/s Intercontinental Consultants & Technocrats Pvt Ltd Vs UOI - 2013(29) STR.9 (Del) submitted that the principles laid down in Bhagavati Trader's case cannot be considered as good law and hence no precedent value . 8. Heard both sides and perused the records. 9. The limited question of law involved in the present appeals is to be addressed is: whether the appellants-stock brokers are required to include NSE/BSE transaction charges, SEBI turnover fees, Stamp duty, Depository/Demat charges and Security Transaction charges in the value of "brokerage and commission charges" recovered from their customers/clients. The contention of the Advocates for the respective appellants is that these charges are colle....
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....payer escaping if the letter of the law fails to catch him on account of the Legislature's failure to express itself clearly. It is well settled that power to tax cannot be inferred by implication; there must be a charging section specifically empowering the State to levy tax. When these are the principles laid down by Apex Court in the case of State of West Bengal v. Kesoram Industries Ltd. - (2004) 10 SCC 201, bringing a strange element to the ambit of tax shall be without authority of law. There was no scope provided by Section 67 of the Act to expend its width to have artificial measure of levy bringing a receipt by implication or inference running counter to the charging provision. 12.4 The scheme of valuation of aforesaid service which was in force till 15-7-2001 underwent amendment by Finance Act, 2001. The amending Act replaced Section 67 by Finance Act, 2001, prescribing levy of tax on the gross amount charged by service provider (stock broker) for the taxable service provided by him. Such aggregate charge was gross value. An explanation appeared in the amended section declaring that value of taxable service as the case may be shall include certain receipts prescribed by ....
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....onceptual meaning of value. Section 67 is the sole repository of law governing value of taxable service provided by the stock broker. Any charge on the non-includible elements other than brokerage or commission will result in arbitrary taxation. Similarly receipts not in the nature of commission or brokerage should not be taxed in disguise. The brokerage or commission service provided by stock broker shall be liable to service tax. That being consideration for taxable service provided, become assessable value of such service. Because tax is compulsory exaction, no subject shall be made liable without authority of law. To the extent authority is vested, only to that extent tax can be imposed. Commission or brokerage charged by stock broker are only liable to tax by express provision of law. Any other exercise of authority beyond that shall make that fatal. 15. The correct assessable value of taxable service usually is the intrinsic value of the service provided since service commands that value only and that should only be taxed without any hypothetical rule of computation of value of taxable service under Section 67 of the Act. The other receipts a stock broker makes are irrelevan....