TaxTMI 
TaxTMI 
TaxTMI 
2023 (8) TMI 793
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....Vs. CCE, Delhi-I 2017 (1) TMI 610- CESTAT New Delhi Karvy Consultants Ltd. Vs. CCE Hyderabad 2008 (10) STR 166 (Tri.- Bang.) 2.1 He submits that a stock broker is liable to pay service tax only in respect of the brokerage earned against trading of listed stock in the stock exchange. In the present case the service is exclusively related to the Initial Public Offering (IPO) of Equity/ Mutual Fund/ Bond, therefore, same is not liable to Service Tax. 3. Shri P. Ganesan, Learned Superintendent (AR), appearing on behalf of the revenue reiterates findings of the impugned order. 4. We have carefully considered the submission made by the both the sides and perused the records. We find that the issue is no longer res-Integra as the identical issue related to the demand on commission received towards public issue of Equity Shares/Bonds has been decided in the favour of the assessee in the following Judgments: (a) In the case of Edelweiss Financial Advisors Ltd (Supra) this Tribunal has passed the following order: "4. On careful consideration of the submissions made by both the sides and perusal of record, we find that in the light of decision of this Tribunal vide order No. A/11854-1....
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.... within the periods before 2001 and after 2001 but before 2004. When service tax was introduced in the year 1994 to tax the service provided to investors by stock brokers in connection with sale or purchase of securities listed on a recognized stock exchange, Legislature, up to the year 2001 intended that aggregate of the commission or brokerage charged to the investors by stock broker for sale or purchase of securities shall be taxed under the charging provision of the Act. So also the commission or the brokerage paid by stock broker to any sub-broker was made liable to tax. Such receipts were measure of value for taxation. The valuation provision incorporated in Section 67 of the Act envisaged that aggregate of commission or brokerage only shall be measure of tax. Basis of taxation was provided in express terms and no implied taxation was permitted by law. 12.2 Law is well settled that there is nothing like an implied power to tax. The source of power which does not specifically speak of taxation cannot be so interpreted by expanding its width as to include therein the power to tax by implication or by necessary inference. The judicial opinion of binding authority flowing from ....
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.... 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 to 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 v. P. Laxmi Devi - (2008) 4 SCC 720 - AIR 2008 SC 1640]. 13. Learned Counsels arguing the matter are correct to say that budget speech of the Hon'ble Finance Minister made clear what was intended to be taxed in respect of service provided by stock broker. It was submission of the learned Counsel Shri Mittal that insofar as stock brokers are concerned, brokerage or commission charged by them only from value of taxable service and that was intended to be taxed by the budget of 1994-95. This was the proposal in Part B of the....
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....ent authorities and claimed that the same is not taxable. But Revenue taxed the same on the ground that such receipt by stock broker was liable to tax. Revenue failed to bring out whether the turnover charges and other charges in dispute in these appeals received by appellant were commission or brokerage. The character of receipts was claimed by appellants as recoveries from investors to make payment thereof to respective authorities in accordance with statutory provisions of Indian Stamp Act and SEBI guidelines and were not received towards consideration in the nature of commission or brokerage of sale or purchase of securities. While burden of proof was on Revenue to establish that such receipts were in the nature of commission or brokerage or had the characteristic of such 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 ta....
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....n the mobilising, selling, recommending mutual fund units of various mutual fund houses and also in selling, mobilising recommending investments in bonds issued by banking and non-banking companies. These activities were clarified to be falling under the category of 'Business Auxiliary Services by Board's Circular No. 66/15/2003-S.T., dated 5-11-2003. Relying on the same, Show Cause Notice was issued to the respondent proposing demand of Service Tax and proposing imposition of penalties. Commissioner dropped the proceedings relying on the decision of the Hon'ble High Court of Andhra Pradesh in the case of Karvy Securities Ltd. v. Union of India reported in 2006 (2) S.T.R. 481 by which the circular dated 5-11-2003 was set aside. 4. Ld. SDR, drawing our attention in the grounds of appeal submits that the said decision of the Hon'ble High Court stands appealed against before the Hon'ble Supreme Court. Fairly, he concedes that he is not aware that any order has been passed by Hon'ble Supreme Court setting aside the judgment or any stay has been granted. 5. Ld. Advocate submits that though appeal has been admitted no order has been passed by the Hon'ble Supreme Court so far. Ld. Adv....
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....ide letter dated 28-10-2004, copy of which is available on record, the said bonds issued under Section 2(2) of Public Debt Act, 1944, constitute a Government security and the bonds were issued by the Government for raising a public loan. Therefore, these is no doubt that the tax savings bonds issued by the RBI and sold by the appellant bank is a Government Security. For this transaction in Government securities, the appellant bank has received a brokerage for sale of the security. From the Circular dated 10-8-2010 issued by the C.B.E. & C., it is clear that there is no Service Tax liability on underwriting fee or underwriting commission received by the primary dealers for dealing in Government securities; the same logic would apply in respect of brokerage also. Further, this Tribunal in the case of Canara Bank and Union Bank of India cases (cited supra) has held that the sale of RBI bonds would amount to statutory/sovereign function and cannot be subjected to any tax liability. 4.2 Following the ratio of these decisions and the clarification issued by the C.B.E. & C. as well as by the RBI, we hold that the impugned demands are not sustainable. Accordingly, the same is set aside. ....
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....ra), Tribunal has passed the following order: "5. Regarding the appellants tax liability under BAS for the amount of brokerage received for distributing IPO for clients, we find the same cannot be covered under Business Auxiliary Service during the relevant time." (c) In the case of Way 2 wealth Brokers Pvt. Ltd (Supra), Tribunal has passed the following order: "2. Briefly the stated facts of the case are that the appellants i.e. M/s. Way 2 Wealth Brokers Pvt. Ltd., are duly registered as service provider under the categories of 'Stock Broker' and Banking and Other Financial Services". During the impugned period i.e., July 2003 to September 2006, the appellants have rendered services in relation to Initial Public Offer (IPO) to their customers. Service tax department issued two show-cause notices alleging that the appellants are required to pay service tax on brokerage received by them on IPO related service in terms of Section 65(19)(i) of the Finance Act, 1994. Adjudicating authority has dropped these two show-cause notices holding that the appellant is not covered by the definition as shares will become goods only if allotment was made. Commissioner of Service Tax reviewed ....