TMI Blog2013 (7) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... of service - Whatever amount is charged for such provision service tax is payable irrespective of whether any profit is made by the service provider in the said transaction. Market Research Services – assesse contended that the service provided does not come under the category of ‘Market Research Services' as they do not pertain to any product, service or utility - Held that:- Research on equity is a product research - the term Market Research Agency was defined in section 65(69) We are of the view the equity research undertaken by the appellant falls within the scope of this definition and accordingly - appellant conducted equity research and prepared reports on the financials of the companies listed in the stock exchanges and the st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st Order-in-appeal No. MI/AV/64/2011 dated 31-01-2011 passed by the Commissioner of Central Excise (Appeals), Mumbai. 2. The appellant, M/s Kotak Securities Ltd., Mumbai, is a joint venture company between M/s Kotak Mahindra Bank Ltd. and M/s Goldman Sachs Ltd. They have a research department which conducts equity research and prepare research reports on the financials of the companies listed on the bourses and the stock market performance of equity shares of such companies. In the Profit and Loss account for the years 99-2000 to 2002-03, they had shown "Fee income/Research Fees received amounting to Rs. 6,51,79,558/- on which no service tax had been paid by the appellant company. The department was of the view that the activity pertainin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided by the appellant and KMCC jointly to clients on a cost/revenue sharing basis. Sharing of cost/revenue can not be construed as consideration for service. Reliance is placed on the circular No. 109/3/2009-ST dated 23-2-09 issued by the CBEC in the context of distribution of cine films. The amounts sought to be shared are in the nature of maintenance, electricity, telephone, stationery, postage, staff costs, etc. which are clearly in the nature of expenses incurred for the equity research department/facility. c) There is no service provider-client relationship between the appellant and KMCC. KMCC is an affiliate company of the appellant under common shareholding of the Kotak Mahindra Group. d) Reimbursement of expenses for resea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the cost of Research Department in the ration of 1:2 between KMCC and the appellant. Sharing of expenses on common usage of facilities is as per the details given in the annexure to the agreement. From the above agreement it is evident that the appellant has been providing research support to KMCC and the consideration for the said service is by way of sharing of costs. 5.2 Allegation in the show cause notice is that the appellant has shown an income during the impugned period (October 2000 to March, 2003) in the P/L account Rs.6,51,79,558/- under the head "Fee income/Research Fees" received. However during the said period, as per the evidence produced by the appellant before the lower appellate authority, the share of revenue towar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s payable, irrespective of whether any profit is made by the service provider in the said transaction. 5.4 Another argument has been raised that the service provided does not come under the category of Market Research Services' as they do not pertain to any product, service or utility. It is not in dispute that the appellant conducted equity research and prepared reports on the financials of the companies listed in the stock exchanges and the stock market performance of equity shares of such companies. Equities definitely come under the categories of products and considered as goods under the Sale of Goods Act, 1934. Therefore, research on equity is a product research. During the relevant time, the term Market Research Agency was defined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undertaken by them. Invoices dated 27-3-2009 and 31-1-2013 produced before us, evidence this fact. 5.7 The appellant has not pleaded any financial hardship. Therefore, in the absence of a prima facie in favour of the appellant, the balance of convenience lies in favour of Revenue and, therefore, as held by the hon'ble High Court of Andhra Pradesh in the case of SQL Star International Ltd. - 2012 (25) STR 113 (AP), pre-deposit of dues adjudged can be ordered. 6. In view of the foregoing, we are of the prima facie view that the appellant has not made out any case in their favour for grant of stay. Accordingly, we direct the appellant to make a pre-deposit of 50% of the service tax amount confirmed against them within a period of eight wee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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