TMI Blog2022 (2) TMI 957X X X X Extracts X X X X X X X X Extracts X X X X ..... t Company, is bound by the SEBI Regulations. They have accounted the brokerage charges paid by them and reimbursed by M/s. SMF so as to make it practical for them to comply with the SEBI Regulations. The brokerage charges paid by the appellant is nothing but reimbursable expenses. The period being prior to 2015 (prior to amendment dated 14.05.2015), the demand of Service Tax on such reimbursable expenses cannot sustain as settled by the Hon ble Supreme Court in the case of M/s. Intercontinental Consultants and Technocrats Pvt. Ltd. [ 2018 (3) TMI 357 - SUPREME COURT] . Time Limitation - HELD THAT:- This Show Cause Notice has been issued alleging suppression of facts and invoking the extended period. There is no evidence put forward by the Department to establish that there is any element of fraud, wilful suppression or mis-statement of facts on the part of the appellant. Since the entire transactions were under discussion between the Department and the appellant and also considering the fact that there were other litigations with regard to the credit availed on Service Tax paid on brokerage charges, it is found that there is no factual or legal basis for invoking the extend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et management fees, portfolio management fees and advisory fees from M/s. SMF for the services provided to them. They classified the above services under Section 65 (105) (zzzzc) of the Finance Act, 1994 as Asset Management Service including portfolio and fund management . The appellants discharged Service Tax on the asset management fees, advisory fees and portfolio management fees received from M/s. SMF. Apart from such fees, they had also received amounts which were reflected in their balance-sheet as Brokerage recoverable from Mutual Fund schemes . 2. The Department was of the view that these amounts shown as Brokerage recoverable are also to be included in the taxable value for payment of Service Tax under Asset Management Services. Show Cause Notice dated 16.10.2015 was issued proposing to demand the Service Tax which is short-paid along with interest and for imposing penalties. After due process of law, the Original Authority vide order impugned herein confirmed the demand along with interest and imposed penalties. Aggrieved, the appellant is now before the Tribunal. 3.1 On behalf of the appellant, Learned Consultant Shri. R. Rajaram appeared and argued the matter. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t shown separately on the invoices only because these were book adjustments credited or debited between the appellant and the service recipient viz. M/s. SMF. Thus, being actual expenses reimbursed, the confirmation of Service Tax is against the provisions of law. 3.2.3 In this regard, it is pointed out by the Learned Consultant that in the appellant s own case before the Tribunal in Service Tax Appeal No. 356 of 2011 which was disposed of vide Final Order Nos. 41761 to 41762 of 2015 dated 08.12.2015, proceedings were initiated as the Department sought to deny the CENVAT Credit of Service Tax paid in respect of Upfront Brokerage on the ground that the appellant was a pure agent and therefore not eligible to avail credit. The said proceedings were held in favour of the appellant by the Tribunal. The Department now cannot turn around and contend that the appellant is not a pure agent of M/s. SMF in order to levy Service Tax on the brokerage paid by the appellant and reimbursed by M/s. SMF. He therefore prayed that the demand may be set aside. 3.3.1 Learned Consultant also argued on the ground of limitation. He adverted to the series of correspondences between the appellant and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It has also been decided during the course of discussion that the value of the reimbursements for expenditures incurred on behalf of M/s. Sundaram Mutual Fund need not be included in the value of asset management services if they were incurred as a pure agent. In this respect, you are requested to give details of reimbursement in the format for July 2009 to March 2012 5. Letter bearing F. No. III/10/74/2011 AU dated 8 November 2012 In your annual report, you have shown an amount of ₹ 23 crores as brokerage recoverable from MF under long term loans and ₹ 19 crores as brokerage recoverable from MF under short term loans. As the brokerages are being reimbursed you may not be eligible for availing credit. 6. Letter bearing C. No. 1074/2011 AU dated 27 July 2012 Please refer to the e mails. It is requested that the following details may please be furnished at the earliest 3. Charges made on mutual fund (scheme as well as load) for expenses incurred on initial expenses of launching scheme and for recurring expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service for providing the services and also any book adjustments credited or debited to any account between the associated enterprises. Therefore, the amount received as brokerage by the appellant is liable to be included in their taxable income. It is not established by the appellant that they are pure agents of M/s. SMF and therefore, the amount cannot be considered as reimbursable expenses. 4.2 Countering the contentions put forward by the Learned Consultant for the appellant on limitation, it is argued by her that the appellant has wilfully mis-declared the consideration amount recovered and recoverable from M/s. SMF by camouflaging it as Unsecured / Considered Good under Loans and advances . The appellants were fully aware that no advances or loans can be obtained from M/s. SMF as per SEBI Regulations. The said aspect has not been countered by the appellants. Though sufficient chance was given to the appellant to prove that they are pure agents and that the amount is reimbursable expenditure, they have failed to do so. Thus, they are guilty of wilful suppression as well as mis-statement of facts. 4.3 She argued that the impugned order does not call for any interference. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ix)costs of providing account statements and dividend/redemption cheques and warrants ; (x)insurance premium paid by the fund ; (xi)winding up costs for terminating a fund or a scheme ; (xii)costs of statutory advertisements ;] [(xiia)in case of a gold exchange traded fund scheme, recurring expenses incurred towards storage and handling of gold;] [(xiib) in case of a capital oriented scheme, rating fees; and] (xiii) such other costs as may be approved by the Board. (5) Any expense other than those specified in sub-regulations (2) and (4) shall be borne by the asset management company [or trustee or sponsors] : [Provided that initial expenses of launching a close-ended scheme shall not exceed six per cent of initial resources raised under that scheme.] 8.1 In the present case, it has to be noted that the appellant was discharging Service Tax on brokerage charges paid by them to the brokers/distributors under reverse charge mechanism. The question then arises whether the value of the services for which the appellant has paid Service Tax under reverse charge mechanism has to be included in the taxable value for discharging the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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