AI Drafter 
TaxTMI 
TaxTMI 
2024 (1) TMI 248
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....change Clearing House which is registered as depository participant. The appellant during the relevant time were not having the necessary statutory permission to act as a depository participant. 1.3 As regard the transaction charges/ administrative charges and VSAP/ TWS (Computer to Computer Linkage) the same are collected on behalf of the respective stock exchanges namely BSE/NSE and the same are paid to them. 2. Shri Vivek Bapat, Learned Counsel appearing on behalf of the Appellant at the outset submits that all the charges collected by the appellant are not their service charge but the statutory charges and the same are deposited to Vadodara Stock Exchange Clearing House and Bombay Stock Exchange and National Stock Exchange, therefore, the same do not attract service tax under any head. He submits that all the issues have been settled in the various judgments, he relied upon the following judgments:- Edelweiss Financial Advisor Ltd vs. CCE & ST , Ahmedabad- 2023 (9)TMI 522 - CESTAT AHMEDABAD Saurin Investments Pvt Ltd - 2023 (1) TMI 454-CESTAT AHMEDABAD Indses Securities and Finance Ltd - 2018 (2) TMI 569 - CESTAT AHMEDABAD Anagram Stock....
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....sion of the Tribunal is reproduced below:- "5. After hearing both the sides and examining the record, we find that in these appeals the service tax has been demanded on various charges/commissions/income, which are dealt under the following heads:- (A) Service Tax on CTCL charges and Depository Charges :- We find that these charges relate to payments made by the appellant for the CTCL computer program. Such a program provides a single point trading access to equity, commodity and currency derivatives markets. The NSE (National Stock Exchange) charges fees for giving this facility to the brokers. The broker then shares this service with the customers and charges the customers to recover the fees paid to NSE by way of reimbursements. The Depository/Demat Charges are levied by the Depository under Depositories Act, 1996. The appellants collect these charges from customers and pay the same to depository participants like CDSL or NSDL. It has been held by this Tribunal in the case of Span Caplease Pvt Ltd (supra) that such charges, which are collected separately and in accordance with various statutory bodies regulations and not retained by the stock brokers but deposi....
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....ng statute, equitable considerations are entirely out of place. Taxing statutes cannot be interpreted on any presumption or assumption. A taxing statute has to be interpreted in the light of what is clearly expressed; it cannot imply anything which is not expressed; it cannot import provisions in the statute so as to supply any deficiency; (ii) before taxing any person it must be shown that he falls within the ambit of the charging section by clear words used in the section; and (iii) if the words are ambiguous and open to two interpretations, the benefit of interpretation is given to the subject. 12.3 There is nothing unjust in the taxpayer 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 ....
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....ative intent from the budget speech and the express legislation in Section 67 of the Act does not leave any room for implication of ambiguity. Therefore, express grant of the statute no way leaves scope for implication to make the statutory grant ineffective. Law being well settled that there is no intendment in taxation and the State has to discharge its burden of proof to bring the subject into tax, there is no scope to bring any other element of receipt other than brokerage or commission to the scope of assessable value in respect of service provided by stock brokers 14. Normally value is derived from the price and value is the function of the price. This is conceptual 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 su....
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....ive appeals are not considered in this order." 10. Similar view has been expressed recently by the Tribunal in M/s Consortium Securities Pvt Ltd.s case (supra). We do not find any reason to deviate from the ratio laid down in the aforesaid judgments of this Tribunal. We are also of the view that the allegation of the department that the demat charges collected by the brokers are banking and financial service, hence taxable, also devoid of merit in as much such charges are collected by the Appellant and paid to the depository participants viz. CDSL/NSDL who are authorised to levy such charges under the Depositories Act, 1996. Thus, in view of the aforesaid precedent, we do not find merit in impugned orders and accordingly set aside. The appeals are allowed with consequential relief, if any, as per law." Accordingly, we hold that the aforesaid charges realized by the appellant are not in the nature of commission or brokerage and that being so; the same shall not form part of the value of taxable services. (B) Service Tax on income from distribution of Mutual funds and Commission from Banks/Companies for investment in their Bonds:- As rightly pointed out by ....
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....espondent also relies on the decision in the case of Commissioner of S.T. Delhi v. P.N. Vijay Financial Services Pvt. Ltd. reported in 2008 (12) S.T.R. 628 (Tri.-Del.) holding similar view. 6. We find that the Commissioner has dropped the proceedings on the ground that the Circular dated 5-11-2003 of the Board which was the basis for issue of Show Cause Notice stands set aside by the Hon'ble High Court of Andhra Pradesh. The said judgment of the Hon'ble High Court has not been set aside or stayed. Under these circumstances, we do not find any infirmity in the order of the Commissioner." Same view has been taken by this Tribunal in the case of P.N. Vijay Financial Services Pvt Ltd. - 2008 (12) STR 628. In view of the above, the demand of service tax on account of income from distribution of mutual funds and selling bonds issued by banks/companies is not sustainable and the same is set aside. (C) Service Tax demand on income from RBI bonds:- We find that the issue of liability to pay the service tax on commission received from sale of RBI bonds is no longer res integra and has been settled by this Tribunal in favour of assessee in the case of Enam Securitie....
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.... Accordingly, the same is set aside. The appellant is also entitled to consequential relief, if any, in accordance with the law. Appeal is disposed of in the above terms." In view of the above, we hold that the demand of service tax on commission received from sale of RBI bonds is not liable to service tax. 6. As the demands in appeal nos. listed at Sr. No. 1, 2, 4 & 5 have been set aside, accordingly the penalties imposed on the basis of these demands do not survive 7. We note that appeal nos. ST/166/2010 and ST/494/2011 are both in relation to the show cause notice bearing F.N. ST29/O7A/SCN/Anagram/JC/08 dt. 08.03.2008, which was adjudicated by Additional Commissioner vide Orderin-Order No. STC/5/ADC/2009 dt. 21.07.2009. In the said Original-in-Order dt. 21.07.2009, demand on account of CTCL Charges, income from public issue/RBI relief bonds and income from distribution of mutual funds was confirmed along with interest and penalty under Section 78 was imposed. However, penalty under Section 76 of the Finance Act, 1994 was dropped. While Revenue went for Revision proceedings for imposition of penalty under Section 76 ibid, the appellant filed appeals bef....
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....y, 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 collected separately and in accordance with various statutory Bodies Regulations and not retained by the stock brokers but deposited with the authorities concerned viz., Stock Exchanges, hence, such charges cannot form part of the taxable value as alleged by the Dept. The determination of the aforesaid question should not the same has been considered by way of judgments including M/s LSE Securities Ltd (supra) "12.1 Matters before us fall 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....
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.... 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 different clauses appearing under Section 67. Clause (a) is the relevant clause insofar as that relates to taxable service provided by stock broker and that is under consideration in these appeals. That clause states that aggregate of commission or brokerage charged by a broker on the sale or purchase of 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 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 co....
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....e 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 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 or commission or brokerage to levy service tax. Burden of proof failed to be discharged by Revenue to bring the receipts to charge 16. The appellants in these appeals received "turnover charges", stamp duty, BSE charges, SEBI fees and DEMAT charges contending that the same was payable to different 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....