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Mohak Commodities Pvt. Ltd V/S Commissioner of C. EX., Jaipur

    Final Order Nos. ST/A/57391-57395/2017-CU(DB) in Appeal Nos. ST/1653-1654, 1699 and 1714-1715/2011-DB
    Decided On, 23 October 2017
    At, Customs Excise Service Tax Appellate Tribunal Principal Bench New Delhi
    By, THE HONORABLE JUSTICE: S.K. MOHANTY
    By, MEMBER AND THE HONORABLE JUSTICE: B. RAVICHANDRAN
    By, MEMBER
    For Petitioner: Kumar Vikram, Advocate And For Respondents: Sanjay Jain, DR


Judgment Text

1. These five appeals are on common issue on dispute, accordingly, are taken up for disposal. The appellants are engaged in stock broking activity. They are registered with the department and discharging Service Tax on the amount received on brokerage. The dispute in the present appeals relates to Service Tax liability on certain charges named as ID charges, turn over charges and transaction charges collected from their clients in the course of providing service. The Revenue entertained a view that these charges are also taxable under the category of stock broker service/online database retrieval service. The lower authorities held that in terms of Section 67 read with Valuation Rules, (18-4-2006), the appellants are liable to pay Service Tax on these charges accordingly confirmed the differential service tax along with penalties.

2. The ld. Counsel for the appellants submitted that they discharging Service Tax properly on stock brokerage service. These charges are now sought to be added in the taxable value to collect tax under stock broker service/online information and data base access or retrieval service. He submitted that the clients have to pay these charges which in turn are paid by the appellants to the National Stock Exchange. There is no mark up or profit retained by the appellants on these charges. The nature and the quantum of these charges are known to the clients to whom the appellants are rendering stock broking service. As such, the ld. Counsel pleaded that they are not providing any service on these considerations. Reliance was placed on the decision of the Tribunal in LSE Securities Ltd. v. CCE, Ludhiana : 2013 (29) S.T.R. 591 (Tri.-Del).

3. The ld. AR contested the appeals and states that the appellants did not submit evidence to the effect that these charges are statutorily mandated and actually passed on to NSE in terms of prior arrangement. The impugned order examined this issue and in the absence of any supporting evidence concluded that the appellants did not pay Service Tax. The ld. AR also submitted that the statutorily provisions prior and post 18-4-2006 have been examined in the impugned order and there is no reason to interfere with the said findings. We have heard both the sides. Admittedly, the appellants are registered with the department for discharging Service Tax as stock broker. They were paying tax on the commissions received from the clients. The dispute in the present appeals relates to certain other charges collected by the appellants from their clients. The prayer of the appellants are that these amounts are nothing but fees and charges for creating customer ID and also charges to be paid to NSE based on the turnover of the appellant. We note that the appellants submitted illustrative documents to support their claim that these charges are specifically and separately indicated in their invoice issued to the clients. They have also paid these amounts to the NSE though on a consolidated basis, every month. For the period prior to 18-4-2006, it is clear that the statutory provision itself permits tax liability on the commission or brokerage charged by the broker on sale and purchase of securities. However, post 18-4-2006, the Revenue contends that these amounts are to be included as other considerations received for providing taxable service. We note the appellants are pleading exclusion on the ground that these are reimbursed on actual basis and no service is rendered by them. For the services rendered commission is received which is taxed. We note that the appellant's claim regarding reimbursable nature of all these amounts requires cross-verification with supporting documents. In case the appellants produced sufficient supporting evidence to the effect that these were charges which are pre determined and known to the clients and actually passed on to NSE without any mark up or retention of margin by the appellant the same cannot be held lia

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ble to tax. This requires verification by the original authority. If the same is established with supporting evidence, no tax liability will arise on such charges. On these observations, impugned orders are set aside, and the matter is remanded back to the original authority for a fresh look. The appellants shall be provided adequate opportunity to submit their case along with supporting evidence. The appeals are allowed by way of remand.
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