M/s. Shreyas Stocks Pvt. Ltd. Versus The Commissioner of GST & Central Excise
Service Tax
2018 (2) TMI 1184 – CESTAT CHENNAI – TMI
CESTAT CHENNAI – AT
Dated:- 8-2-2018
ST/MISC/41607/2017 & ST/355/2010 – Final Order No. 40412/2018
Service Tax
Ms. Sulekha Beevi, Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical)
Ms. Radhika Chandrasekar, Advocate for the Appellant
Shri R. Subramaniyam, AC (AR) for the Respondent
ORDER
Per Bench
The facts of the case in brief are that the appellants are registered with Service Tax department for rendering taxable service under the category of “Stock Broking Service.” During the course of audit, it was noticed that in addition to brokerage charges appellants had collected transaction charges from their customers on the value of purchase and sale of the securities from April 2004 to June 2007 amounting to Rs. 81,37,357/-. Hence, a SCN dated 27.11.2007 was issued to the appellants interalia proposing to demand servi
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value of a taxable service, as the case may be, includes,
(a) the 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;”
Ld. Counsel submits that the transaction charges were not charged by them but were charged by the stock exchange and that they were only collecting the amount from their clients and paying it on their behalf to the stock exchange. She also submits that wherever they had collected the amounts more than the transaction charges, they had discharged service tax liability on such excess amounts, a fact which is not disputed by the department. She further submits that the matter is no longer res integra and has been decided in favour of the appellants in a number of Tribunal decisions. Ld. Counsel relies upon the following Tribunal decisions in support of her arguments:-
a. First Securities Pvt. Ltd. Vs. CST, Bangalore 2007 (7) STR 690 (Tri.-Ban
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ts and remitting the same to the concerned stock exchange cannot be a reason for considering such amounts as received by them for “services rendered by them”. We find that this is the very ratio that has been laid down in the Tribunal decisions relied upon by the Ld. Counsel.
5.2 In the case of First Securities Pvt. Ltd. (supra) the Tribunal has held that handling charges collected from investors and the amounts collected towards transaction charges cannot be equated to brokerage or commission for purchase of securities. The relevant portion of the said decision is reproduced as under:-
“6. In the impugned order, the Commissioner (Appeals) has held that the lower authority is right in including the handling charges and transactions charges as part of the taxable value as additional brokerage for Service Tax purpose. The learned Advocate who appeared for the appellants took us through the impugned order and stated that the Commissioner (Appeals) was not justified in stating that the
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s by the appellants also cannot be equated to brokerage or commission. It is seen that the transaction charges collected have been paid to the National Stock Exchange of India Ltd. In Kohlers Dictionary for Accountants, 6th Edition, the term brokerage is defined as follows :-
“brokerage A commission, paid or accruing to a broker, arising from effecting a deal between seller and buyer, and borne by either party in accordance with custom, regulation or special agreement. It may be fixed, as in stock market transactions, by trade or government bodies, and may take any of various forms, such as a percentage or modification of selling price; a (finders) fee; an underwriting or other discount (4); a concession or other advantage (whether or not transaction -related).”
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 chargin
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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 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 re
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