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whether the share premium charged by the Indian Company while allotment of shares to their parent Company (based outside India) is liable for service tax under the Finance Ac

whether the share premium charged by the Indian Company while allotment of shares to their parent Company (based outside India) is liable for service tax under the Finance Ac - Service Tax - Started By: - hanmant kadam - Dated:- 11-5-2015 Last Replied Date:- 29-11-2015 - 1. One Indian Company has allotted their shares to their parent Company situated in Germany, having face value of ₹ 10/-each. While such allotment they had charged premium @ ₹ 100/-/ 90/-or 50/- per share for such al .....

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t is an act for which the Indian Company had charged and received amount under the head of premium which is nothing but a consideration for service of allotment of shares . 1.2 After issue of the share at premium , face value of the share is considered as investment and premium is nothing but value over and above the face value of the share charged by a company for allotment of Shares , which is nothing but a taxable service after introduction of the Negative List base taxation w.e.f. 1-07-2012. .....

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obligation to do an act as mentioned under sub clause (e) of section 66E of the Act 2.2 Thus activity of allotment of shares which is carried out for the consideration received as premium by Indian Comapany for German Company., is rightly treated as Agreeing to the obligation to do an act , which is a declared service under sub clause (e) of section 66E of the Act 3. Further , As per para 2.6.7 of the CBEC s Education Guide:- 2.6.7 What are the implications of inclusion of securities as goods ? .....

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the ambit of services . However activities which are not in the nature of transfer of title in securities (for example a person agreeing not to exercise his right in a security for a given period of time for a consideration) would not be included in this exclusion clause to the definition of service . 3.1 Thus, it appears that the face value of share is covered under the definition of Securities and hence not chargeable to tax. However, charging of premium for allotment of shares is out side th .....

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taxable / exempted services , as there is use of common input/ input services , it appears that in that case provisions of CCR Rule 6(3) are invokable for demanding reversal of CENVAT Credit on amount of Premium received by the Indian Company. - Reply By bhart b sharma - The Reply = the case requires detailed deliberations on several points. as a preliminary, can go through following case law though facts may differ from your case supposedly as all details are not forthcoming from the synopsis a .....

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ture of only transfer of title by way of sale, redemption, purchase or acquisition of securities on principal-to-principal basis are outside the ambit of services'According to the above guide, sale of securities on a principal to principal basis are outside the ambit of services. It nowhere refers to the price at which the transactions are carried out. The case as discussed by you, is for allotment of securities. The transaction is carried out on a principal to principal basis. Hence the tra .....

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