TaxTMI 
TaxTMI 
2022 (2) TMI 957
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....ed, regulations of SEBI and the other laws in force are fulfilled. For these purposes, an agreement has been entered between appellant and M/s. SMF for investment management viz. Investment Management Agreement dated 27.08.2003 as amended. The aforementioned Investment Management Agreement between appellant and M/s. SMF provides for payment of consideration by M/s. SMF for the services provided by the appellant, as in terms of clause 6 of the said Agreement, which includes 1% / 1.25% of the weekly average of net assets outstanding in each accounting year for the Mutual Fund schemes concerned. In addition to the above mentioned Management Fee, appellant can charge M/s. SMF for the initial expenses of launching schemes and other recurring expenses like Marketing and Selling Expenses including Agent's commission, Brokerage & transaction costs, Audit Fees, Insurance premium paid by M/s. SMF, cost of statutory advertisement, etc., which shall however be subjected to limitations prescribed by SEBI regulations. 1.2 The appellant provides various services to M/s. SMF like making of investment decisions and management of assets of the scheme introduced by M/s. SMF, framing and launching ....
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....l Consultants and Technocrats Pvt. Ltd [2018 (10) G.S.T.L. 401 (S.C.)]; • That Service Tax is at best applicable on reimbursement of expenses only after 14.05.2015 (when Section 67 of the Finance Act, 1994 was amended) and hence, during the impugned period i.e., till May 2015 question of levy of Service Tax on reimbursement does not arise; • Rule 5 (2) of the Service Tax (Determination of Value) Rules, 2006 prescribes that Service Tax is not applicable on reimbursement of expenses received in the capacity as pure agent; that they have complied with the conditions prescribed under the said Rule; 3.2.1 He adverted to Regulation 52 of the SEBI (Mutual Funds) Regulations, 1996 and submitted that as per Regulation 52 (4), in addition to the advisory fees for asset management services, the appellant can charge the customer (M/s. SMF) expenses incurred for launching the schemes and other recurring expenses such as marketing and selling expenses including agents' commission, brokerage and transaction cost, etc. For the period when brokerage services were subject to levy of Service Tax, the appellant has paid Service Tax on such services under reverse charge mec....
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.... same. The initial expenses and recurring expenses of the scheme are reimbursed from SMF. As the above said expenses are covered under the above categories and got reimbursed from SMF, they do not form part of the assessable value of their output services viz. Asset management services ..." 3. Letter bearing C. No. IV/16/908/2010-LTG 6A dated 18 January 2010 "Kind reference is drawn to the various discussions and correspondences this office had on the concept of 'pure agent' it is inferred from which that the mutual fund normally reimburses expenses incurred towards the activities undertaken by the AMC as a pure agent, on behalf of the mutual fund. It is further understood that there are instances wherein the entire expenses are not reimbursed and that the service tax paid on the expenses that was not reimbursed is being availed as credits into the AMC credit availed account. .... It appears that the two definitions are mutually exclusive and cannot be entertained simultaneously. The following details are required immediately please: Total reimbursement applied by the AMC to the mutual fund; Total reimbursement sanctioned by the mutual fund to the AMC..." 4. ....
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....ent denied the CENVAT Credit of Service Tax paid on brokerage charges. Since the Department was all along aware of the fact that the appellant was receiving brokerage charges and there were also proceedings initiated for disallowing the credit of Service Tax paid on brokerage charges, the invocation of extended period of limitation alleging that the appellant is guilty of wilful suppression of facts and mis-statement is without any factual basis. 4.1 Learned Authorized Representative Ms. Sridevi Taritla appeared and argued the matter on behalf of the Revenue. She relied on paragraphs 22 and 24 of the impugned order to contend that the appellant is the associated person of M/s. SMF and in terms of Section 67 (1) (i) of the Finance Act, 1994 read with the Third Proviso to Rule 6 (1) of the Service Tax (Determination of Value) Rules, 2006, the appellant is liable to pay Service Tax on the gross amount charged by the service provider. This gross amount charged shall include any amount received towards taxable service for providing the services and also any book adjustments credited or debited to any account between the associated enterprises. Therefore, the amount received as broker....
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....one per cent (0.75%) of the weekly average net assets." (3) For schemes launched on a no load basis, the asset management company shall be entitled to collect an additional management fee not exceeding 1% of the weekly average net assets outstanding in each financial year. (4) In addition to the fees mentioned in sub-regulation (2), the asset management company may charge the mutual fund with the following expenses, namely:- [(a) initial expenses of launching close-ended schemes, which shall be accounted in the books of account of the scheme in accordance with the Tenth Schedule;] (b)recurring expenses including:- (i) marketing and selling expenses including agents' commission, if any ; (ii) brokerage and transaction cost ; (iii) registrar services for transfer of units sold or redeemed ; (iv) fees and expenses of trustees ; (v) audit fees ; (vi) custodian fees ; [(vii) costs related to investor communication ; (viii)costs of fund transfer from location to location ; (ix)costs of providing account statements and dividend/redemption cheques and warrants ; (x)....