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2016 (11) TMI 1293 - CESTAT NEW DELHI

2016 (11) TMI 1293 - CESTAT NEW DELHI - TMI - Demand - Stock Broker Services - Banking & Other Financial Services - Business Auxiliary Service - Held that: - no service tax will be leviable on transaction charges in the hands of the stock broker - Banking & Other Financial Services - delayed payment charges - Held that: - delayed payment charges received by the stock brokers are not includible in taxable value as the same are not the charges for providing taxable services. Such charges are o .....

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]" w.e.f. 01/5/2006. In the impugned order such charges have been levied to service tax under Business Auxiliary Service for the period prior to 01/5/2006. We find no justification for such demands. It is fairly well settled that when a new service is introduced from a particular date, the same activity cannot be charged to service tax prior to that date. The only exception could be if the new service is carved out of an existing service - the service came into service tax net only with effect f .....

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ent. Per. V. Padmanabhan : The present appeal is directed against the order dated 20th July 2010 passed by the Commissioner of Service Tax, New Delhi. The appellant is engaged in the trading of securities as stock broker and a Member of National Stock Exchange and Bombay Stock. On the basis of investigation undertaken by Revenue the appellant, who, is already registered with the Service Tax Department for providing stock broking services, was issued a show cause notice dated 15/7/09 for demand o .....

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ceived for the period prior to 16/5/08. These charges were made specifically taxable under stock exchange services w.e.f. 16/5/08 consequently they have argued that for the period prior to this, no service tax can be levied under stock broker services. They have relied upon the decision of the Tribunal in the case of LSE Securities Ltd. vs. CCE, Ludhiana reported in 2013 (29) S.T.R. 591 (Tri. - Del.), (ii) the impugned order has confirmed a demand of ₹ 71,92,261/- under banking and other f .....

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blic Offering of shares for which they acted as Registrars to the issue. Such charges were made taxable only w.e.f. 01/5/06 under Registrar to the issue services. Consequently they are not liable to service tax for the period prior to 01/5/2006. In this connection, they have placed reliance on the following case law : CCE, Indore vs. Ankit Consultancy Ltd. reported in 2007 (6) S.T.R. 101 (Tri. - Del.). They are not pressing a small demand to the tune of ₹ 882/- made under stock broking ser .....

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which service tax will be payable on the commission received by the stock broker from the investors towards provision of the stock broking services w.e.f. 16/5/08. An additional service was introduced to levy service tax on stock exchange services. The stock brokers carried out transactions of purchase and sale of securities on behalf of investors through either the Bombay Stock Exchange or National Stock Exchange. These stock exchanges in turn levy charges towards the transaction in securities .....

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ch transaction charges. W.e.f. 16/5/08, a new service in the name of "stock exchange services" have been brought in the statute book. Such transaction charges recovered by the stock exchange will be liable to service tax under the later service. The present issue has come up before the Tribunal in the case relied upon by the appellant in the case of LSE Securities Ltd. (supra). It has been held that no service tax will be leviable on transaction charges in the hands of the stock broker .....

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ant were commission or brokerage. The character of receipts was claimed by appellants as recoveries from investors to make payment thereof to respective authorities in accordance with statutory provisions of Indian Stamp Act and SEBI guidelines and were not received towards consideration in the nature of commission or brokerage of sale or purchase of securities. While burden of proof was on Revenue to establish that such receipts were in the nature of commission or brokerage or had the character .....

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are not considered in this order". (b) Bankina & Other Financial Services :- The demand under the Banking and Other Financial Services have been raised on amounts recovered by the stock broker towards the delayed payment charges. Once a purchase transaction in securities is carried out by a stock broker on a stock exchange, the broker is liable to pay the stock exchange for such purchase of securities within the time fixed by the stock exchange. The stock broker is required to pay the s .....

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his issue stands clarified by the CBEC vide their Circular dated 03/8/11. The Circular clarification as follows :- "2.1 In a similar manner, delayed payment charges received by the stock brokers are not includible in taxable value as the same are not the charges for providing taxable services. Such charges are on account of delay in making payments by the service recipient to the service provider and are in the nature of a penal charge for not making the payment within stipulated time. Such .....

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Such amounts have been charged to service tax under a new service, "[registrar to an issue]" w.e.f. 01/5/2006. In the impugned order such charges have been levied to service tax under Business Auxiliary Service for the period prior to 01/5/2006. We find no justification for such demands. It is fairly well settled that when a new service is introduced from a particular date, the same activity cannot be charged to service tax prior to that date. The only exception could be if the new se .....

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taxable services with effect from 15-2006. Since these demands pertain to a period prior to 15-2006, the levy of service tax under any other category is not justified. 3. The Revenue has come before the Tribunal, aggrieved over the order of the Commissioner (Appeals) on the following grounds :- (i) According to the Revenue, the service of 'Registrar to Issues" should be an incidental auxiliary support service for initial public offer of shares of companies who want to raise capital fro .....

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