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2014 (1) TMI 1611 - AT - Service TaxSale of Reserve Bank of India (RBI) Bonds issued by the RBI - Receipt of brokerage - Held that:- As per notification dated 13/03/2003 issued by the Government, the tax savings bonds have been issued as part of the borrowing programme of the Government from the public. As per the clarification issued by the RBI vide 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, there 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 10/08/2010 issued by the CBE&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 - sale of RBI bonds would amount to statutory/sovereign function and cannot be subjected to any tax liability - Following decision of Canara Bank Vs. CST, Bangalore [2012 (6) TMI 274 - CESTAT, AHMEDABAD] - Decided in favour of assessee.
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