2018 (9) TMI 1716

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.... Services. They are registered with the department under the category of 'Stock Broking Services' and 'Banking and Other Financial Services (BOFS)'. During the period of accounts, for the period January to May 2008, it appeared that apart from collecting brokerage for all the transactions with their clients, they have also collected turnover charges or transaction charges @ 0.0035% / 0.0025% of total value of transaction which amount was paid to the stock exchange. Further, on verification of cenvat documents for the year 2004-05 to December 2008, it appeared that assessee had availed ineligible credit of service tax paid towards employees insurance, food charges and travelling expenses which are not used in providing the ou....

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....ing of the output service and they could not have been availed by the assessee. He also submits that debit note is not a valid document for the purpose of availing credit. 3.1 On the other hand, we find that the assessee has argued that turnover charges / transaction charges are levied by respective stock exchanges on the traded value of the transaction; that the exchanges had imposed the obligation of collecting such transaction charges on the stock brokers; that only because of this the charges are passed on by the assessee and collected from their clients; that the bills are sent by the stock exchanges to the stock brokers on monthly basis and payments are debited electronically; that hence the transaction charges levied by stock exchan....

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.... stock brokers will not include transaction charges and handling charges. The relevant portion of the said decision is reproduced below : "The handling charges are the expenses incurred for handling shares on delivery. The appellants have clarified that prior to 2001, there used to be physical delivery of scrips and certificates and the appellants were charging towards 'handling' of scrips and certificates. The 'handling charges' were collected from certain investors/clients. In respect of speculative transactions, no handling charges were collected from the investors/clients as there was no handling of scrips and certificates. We are convinced that the handling charge is not in the nature of commission or brokerage for purchase of securit....

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.... nature that was failed to be discharged. The character of commission or brokerage is remuneration for the service of stock broking provided by a stock broker to investors. Therefore, aforesaid charges realized by appellants were not being of commission or brokerage are not taxable and shall not form part of gross value of taxable service. On merit, all the appellants succeed on the fundamental principles of taxation. Therefore, other contentions on merit made in respective appeals are not considered in this order." The same ratio was followed by Tribunal in a recent decision in the case of Mohak Commodities Pvt. Ltd. Vs CCE Jaipur - 2018 (100 G.S.T.L. 316 (Tri.-Del). 5.2 In the circumstances, following the same ratio, we have no hesitat....