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Commissioner of Central Excise, Kanpur Versus M/s PK Khandelwal And Co, M/s BNK Investment, M/s Praveen Kumar And Co, M/s Amar And Co, M/s Sunil Brothers, M/s Atul Kanodia And Co

2016 (1) TMI 391 - CESTAT ALLAHABAD

Sub-Broker services or BAS - sale or purchase of the securities - the case of the department is that the sub-broker arranged business for their principal broker and they issued contract note-cum bills to the ultimate clients. For the services rendered, the sub-brokers are paid brokerage/commission by the principal broker. Thus, it was held that the sub-brokers are liable to pay tax under the category of 'Stock Broker Services'.

Held that:- During arguments an issue came up that the se .....

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was raised on the respondent classifying the service as Stock Broker Service. Therefore, it cannot now be stated that the demand is payable under the Business Auxiliary Services.

Appeal of the revenue dismissed - Decided against the revenue. - Appeal Nos. ST/1741 to 1746/2010 - Dated:- 18-9-2015 - P. S. Pruthi, Member (T) And S. S. Garg, Member (J) For the Appellant : Shri Rajiv Ranjan, Jt. Commissioner (AR) For the Respondent : Shri Dharmendra Srivastava, CA ORDER Per P S Pruthi Thes .....

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' was the service provided by stock broker in connection with the sale or purchase of the securities listed in the recognized stock exchange. Under Section 65(101), during the period of dispute the definition of 'stock-broker' is a person, who is registered as a stock broker or sub-broker as the case may be in accordance with the Rules and Regulations of Securities & Exchange Board of India (SEBI). The case of the department is that the sub-broker arranged business for their prin .....

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bserved that the Service Tax was already paid on the total brokerage by the main broker. The taxable services cannot be taxed twice. He observed that SEBI vide its Circular dated 5.8.2005 prohibited sub-brokers to issue contract notes. Therefore, confusion remained from the 10.9.2004 to 6.7.2009. Thereafter CBE&C excluded the sub-brokers from the purview of Service Tax by excluding the words "sub-broker" from the definition of Stock-broker w.e.f . 6.7.2009. Consequently, the Commis .....

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ain broker, this cannot be a basis of setting aside the legally sustainable demand. The concept of revenue neutrality applies only when the CENVAT Credit is available to the same assessee under the same unit or in another unit. 4. Heard the parties and considered the submissions. 5. The learned Counsel for the respondent brought to our notice that on directions of the Hon'ble Punjab & Haryana High Court, Larger Bench in the case of Commissioner of Central Excise, Chandigarh Vs. M/s N.K. .....

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ll the three references is on a narrow compass. There is no dispute by either side that a sub-broker is falling under the definition of stock broker under Section 65(101) of the Finance Act, 1994 w.e.f . 10-9-2004. The definition reads as under:- "(101) 'Stock-broker' means a person, who has either made an application for registration or is registered as a stock-broker or sub-broker, as the case may be, in accordance with the rules and regulations made under SEBI Act 1992". The .....

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service from the aforesaid date. So also, a sub-broker who is registered or has made an application for registration as such under SEBI Act, 1992, is permitted to provide similar service as provided by a stock broker. The service so provided becomes taxable service under Finance Act, 1994 w.e.f . 10-9-2004. A sub-broker is thus liable to pay service for the nature of taxable service provided as defined by Finance Act, 1994 aforesaid. 9. It is true that there is no provision under Finance Act, 19 .....

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ntity of sub-broker and stock broker is established and transactions are provided to be one and the same. In other words, if the main stock broker is subjected to levy of service tax on the self same taxable service provided by sub-broker to the stock broker and the sub-broker has paid service tax on such service, the stock broker shall be entitled to the credit of service tax. Such a proposition finds support from the basic rule of Cenvat credit and service of a sub-broker may be input service .....

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was not within the fold of law during that period. 10. In all the three references before us, it would be proper to send the matter back to the original authority, without being sent to the concerned Benches, to verify as to whether the stock-brokers have paid service tax on behalf of the sub-brokers and if so, reduce the demand on sub-brokers to that extent and pass fresh orders, granting fair opportunity of hearing to the sub-brokers. All the appeals are allowed by way of remand." 6. We .....

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