TMI Blog2014 (4) TMI 588X X X X Extracts X X X X X X X X Extracts X X X X ..... in the value of the services. As is seen from the above, the DPCs recovered separately and shown separately in the invoices/bills cannot be held liable to payment of service tax. Admittedly, in the present case, such DPCs were being recovered by the appellants by issuing separate debit notes to their customers and by debiting the amounts in their running ledgers. As such, the clarification issued by the Board is fully applicable to the facts of the present case - appellants were maintaining all the records showing recover of said DPCs and were reflecting the same in their books of accounts as also in their balance-sheet. The Commissioner has invoked longer period only on the short ground that they have never disclosed the same to the Revenue and said non-payment of service tax is indicative of the assesses intention and motive to evade tax. However, we fail to understand that if the fact of non-payment of tax, by itself, can be made a ground by attributing mala fide to an assessee, the limitation period would never be applicable in any case of non-payment and the resultant confirmation of demand. In any case, Commissioner has also observed that it is possible to invoke extended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y are issuing Contract Notes to their clients, which are being dispatched to the customers either in physical (hard copy) form or in digital mode (soft copy) mode in respective e-mail id. The appellants are maintaining client-wise ledger/books of accounts and duly debited brokerage and applicable statutory charges like stamp duty, service tax, exchange turnover charges, STT to the customers on the settlement date as posting date in the ledger. The clients desirous of trading are required to pay initially a margin money either in cash or in the form of collateral security such as shares to assessee. Such securities are kept in its depository account. On the basis of available margin, the customers are allowed to purchase/sell the securities. The clients are required to pay off their obligations by settlement date either through cheque or demand draft. 5. The appellants are making payments towards stock exchanges, made on behalf of their clients in advance, irrespective of the receipt of transacted amount. In cases, their clients made any delay in making payments to the appellants, they charged Delayed Payment Charges (hereinafter referred to as DPC, for the sake of brevity) fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or a contract note raised against their clients for rendering any service, but is a simplicitor, an information to their client about the penal interest having been debited to their running account. It is the contention of the appellant that they have made payments to the Exchange on behalf of their clients, who delayed the payments against their transactions of their securities. As such, they have contended that by no stretch of imagination, such DPCs can be held to be associated with the services of stock broking so as to treat the same as commission/brokerage and to levy service tax in respect of the same. In support of his submissions, Ld. Advocate draws our attention to the various circulars issued by CBEC as also precedence decisions of the Tribunal. 9. On the other hand, it is the contention of the Revenue that the amount collected by the appellants as DPCs is nothing but a consideration in connection with securities purchased and sold by broker on behalf of their clients. Any income generated upto the settlement of the contract note, shall from taxable value in terms of Section 67 of the Finance Act, 1994. The service of a stock-broker gets completed only when the ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the agreement entered by the appellants with investors, - any amount overdue towards trading or any other reason will be charged with delayed payment charges . Perusal of the said clause reveals that the DPCs are collected only in case of overdue payments. The reasoning of the Commissioner that the origin of the DPC has taken place on account of business or service of sale/purchase of securities by a stock-broker and the same has to be considered as a part of the service does not appeal to us, for the simple reason that such DPC collection has got nothing to do with the sale/purchase of the securities, a service which the appellants is rendering as a stock-broker but admittedly is a charge recovered from only those customers, who delayed the payments of the securities value and is in fact is a penal interest, for compensating the assessee for the payments already made by them, to the Exchange, on behalf of their clients. In the case of LSE Securities Ltd. Vs. CCE, Ludhiana 2013 (29) S.T.R. 591, the Tribunal deliberated on more or less an identical issue of inclusion of Demat turnover charges, BSE charges and SEBI fee recovered by them from their clients and deposited with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08 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 in so far as stock brokers are concerned, brokerage or commission charged by them only form 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 Budget presented to the Parliament on 28th February, 1994. Reading of the legislative 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 derive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : Section 67 - Clarification regarding service tax on delayed payment charges collected by the service provider in respect of Stock Broker's services-reg. Representations have been received seeking clarification regarding leviability of service tax on the additional amount that is collected towards the delay in making payment to the stock brokers by their customers (delayed payment charges) in respect of Stock Broker's services. 2. The matter has been examined. Clarifications issued by the Board in the past on similar issues are summed up below:- (i) Circular No. 96/7/2007 at para 002.01 clarifies that an amount collected for delayed payment of a telephone bill is not to be treated as consideration charged for provision of telecom service and therefore, does not form a part of the value of taxable service. (ii) Circular No. 121/02/2010-ST dated 26.4.2010 clarifies that detention charges in respect of detained containers are not in respect of service provided on behalf of client (under BAS) nor it on account of infrastructure support services (under BSS). Such charges can at best be called as 'penal rent' for retaining the containers beyon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able in any case of non-payment and the resultant confirmation of demand. In any case, Commissioner has also observed that it is possible to invoke extended period of limitation in the case of service tax even in a situation where there is nothing to evade payment of duty, in as much there is no requirement that suppression should with intention to evade. He has observed that a mere suppression is adequate for the purpose of recovery of tax in the extended period as well as for imposition of penalty. We observe that the word suppression itself denotes a mala fide mind, there can be no 'suppression' without an intent to evade payment of service tax. The Courts in various cases have held that non-disclosure of a fact cannot be equated with suppression. As such, non-intimation can be without a mala fide but a suppression has to be always with mala fide and it does not further require the adjective of with intend to evade in the legislation itself. Admittedly, the demand of duty having been raised by invoking the longer period of limitation in the first Show Cause Notice dated 20.10.2010 is barred by limitation to the major extent even though a part may fall within the l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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