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2018 (10) TMI 641 - AT - Service TaxLiability of service tax - Stock Broker - various charges/commissions/income - CTCL charges - depository service - commission from mutual funds - income from RBI bonds, Govt. securities, public issues under B.S.A. - commission from banks for promotion of their bonds - penalties. Service Tax on CTCL charges and Depository Charges - Held 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 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 - Tribunal in the case of Span Caplease Pvt Ltd [2018 (2) TMI 569 - CESTAT AHMEDABAD] held that such charges, which are collected separately and in accordance with various statutory bodies regulations and not retained by the stock brokers but deposited with the authorities concerned (e.g. National Stock Exchange), such charges cannot form part of the taxable value - 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 - demand set aside. Service Tax on income from distribution of Mutual funds and Commission from Banks/Companies for investment in their Bonds - validity of SCN - Held that:- The demand in the show cause notice has been raised in the category of banking and financial services whereas in the adjudication order, the same has been confirmed under Business Auxiliary Service (BAS), which is beyond the show cause notice. This fact has not been rebutted by the Ld. A.R. - otherwise also, the issue is settled in the case of CST, Delhi vs. ABN Amro Bank [2011 (1) TMI 69 - CESTAT, NEW DELHI], where iCommissioner 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 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. Service Tax demand on income from RBI bonds - Held 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 Securities Pvt Ltd [2014 (11) TMI 585 - CESTAT MUMBAI], where it was held that the lending or borrowing of money by the Government is a sovereign function and on such functions there cannot be any tax liability whether by way of direct tax or by way of indirect tax - the demand of service tax on commission received from sale of RBI bonds is not liable to service tax. Penalties on above also set aside. Appeal allowed - decided in favor of appellant.
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