TMI Blog2024 (1) TMI 248X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of Edelweiss Financial Advisor Ltd. [ 2023 (9) TMI 522 - CESTAT AHMEDABAD ] it has set aside the demand of service tax on computer to computer linkage service. In the case of Saurin Investments Pvt Ltd [ 2023 (1) TMI 454 - CESTAT AHMEDABAD ] this Tribunal has held that NSDL/CDSL charges collected by the stock broking firm cannot be liable for service tax. Thus, it is settled that all the charges which are involved in the present case have been held as not the service charges of the broking firm and hence not liable to service tax and this consistent view has been taken in the other judgments cited by the appellant. Therefore, in the present case also all the charges which were collected on behalf of the stock exchange are not liable to Service Tax. The impugned orders confirming the demand of service tax are set aside - Appeal allowed. - HON'BLE MEMBER ( JUDICIAL ) , MR. RAMESH NAIR And HON'BLE MEMBER ( TECHNICAL ) , MR. RAJU Shri Vivek Bapat , Advocate for the Appellant Shri Ajay Kumar Samota , Superintendent ( AR ) for the Respondent ORDER RAMESH NAIR The issue involved in the present case is that whether (i) Demat/ Deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. We have carefully considered the submission made by both sides and perused the records. We find that all the charges on which service tax was demanded by the Revenue are statutory charges which are though collected from the sub- brokers but the same was deposited to the stock exchange i.e. Vadodara Stock Exchange Clearing House, Bombay Stock Exchange National Stock Exchange , therefore, these charges were not collected as service charge of the appellant but only as reimbursement which was paid to the stock exchange. Therefore, these charges cannot be considered as the service charge of any services provided by the appellant to their sub-broker. These issues have been consistently decided in various judgments cited by the appellant. In the case of Edelweiss Financial Advisor Ltd. (Supra) it has set aside the demand of service tax on computer to computer linkage service wherein following order was passed: 4. On careful consideration of the submission made by both the sides and perusal of records, we find that in the present case the demand was confirmed on the appellant who is acting as a stock Broking Company on the charges collected against computer to computer linkage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bodies Regulations and not retained by the stock brokers but deposited with the authorities concerned viz., Stock Exchanges, hence, such charges cannot form part of the taxable value as alleged by the Dept. The determination of the aforesaid question should not the same has been considered by way of judgments including M/s LSE Securities Ltd (supra); 12.1 Matters before us fall within the periods before 2001 and after 2001 but before 2004. When service tax was introduced in the year 1994 to tax the service provided to investors by stock brokers in connection with sale or purchase of securities listed on a recognized stock exchange, Legislature, up to the year 2001 intended that aggregate of the commission or brokerage charged to the investors by stock broker for sale or purchase of securities shall be taxed under the charging provision of the Act. So also the commission or the brokerage paid by stock broker to any sub-broker was made liable to tax. Such receipts were measure of value for taxation. The valuation provision incorporated in Section 67 of the Act envisaged that aggregate of commission or brokerage only shall be measure of tax. Basis of taxation was provided in ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Clause (a) is the relevant clause insofar as that relates to taxable service provided by stock broker and that is under consideration in these appeals. That clause states that aggregate of commission or brokerage charged by a broker on the sale or purchase of securities including the commission or brokerage paid by the stock broker to any sub-broker shall be liable to service tax. Thus, there is no extended meaning of measure of levy even by amended definition of valuation of taxable service. 12.5 Provision of Section 67 provides the basis to determine the value of taxable service. No ambiguity persists in Section 67 of the Act. No receipt other than commission or brokerage made by a stock broker is intended to be brought to the ambit of assessable value of service provided by stock broker. Charging section in a taxing statute is to be construed strictly. As is often said, there is no equity about tax. If the words used in a taxing statute are clear, one cannot try to find out the intention and the object of the statute [Ref : Govt. of Andhra Pradesh v. P. Laxmi Devi - (2008) 4 SCC 720 - AIR 2008 SC 1640] 13. Learned Counsels arguing the matter are correct to say that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essable value of taxable service provided by him. Thus the test is whether a receipt of stock broker is in the nature or commission or brokerage to levy service tax. Burden of proof failed to be discharged by Revenue to bring the receipts to charge. 16. The appellants in these appeals received turnover charges, stamp duty, BSE charges, SEBI fees and DEMAT charges contending that the same was payable to different authorities and claimed that the same is not taxable. But Revenue taxed the same on the ground that such receipt by stock broker was liable to tax. Revenue failed to bring out whether the turnover charges and other charges in dispute in these appeals received by appellant 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 characteristic of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been quashed by the Hon ble High Court of Andhra Pradesh in the case of Karvy Securities Limited (supra). The said judgment has been affirmed by Hon ble Supreme Court as reported in 2015 (39) STR 705 (SC). The above judgment of Hon ble High Court of Andhra Pradesh has been followed by this Tribunal in the case of CST, Delhi vs. ABN Amro Bank (supra), wherein this Tribunal has held as under: 3. The respondent is engaged in the mobilising, selling, recommending mutual fund units of various mutual fund houses and also in selling, mobilising recommending investments in bonds issued by banking and non-banking companies. These activities were clarified to be falling under the category of Business Auxiliary Services by Board s Circular No. 66/15/2003- S.T., dated 5-11-2003. Relying on the same, Show Cause Notice was issued to the respondent proposing demand of Service Tax and proposing imposition of penalties. Commissioner dropped the proceedings relying on the decision of the Hon ble High Court of Andhra Pradesh in the case of Karvy Securities Ltd. v. Union of India reported in 2006 (2) S.T.R. 481 by which the circular dated 5- 11-2003 was set aside. 4. Ld. SDR, drawin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sustainable in law. Accordingly, we set aside the same and allow the appeals with consequential relief, if any, in accordance with the law. The ratio of the judgment of this Tribunal in the case HDFC Bank Ltd (supra) is reproduced below: 4.1 As per Notification dated 13-3-2003 issued by the Government, the tax savings bonds have been issued as part of the borrowing programme of the Government from the public. As per the clarification issued by the RBI videletter dated 28-10-2004, copy of which is available on record, the said bonds issued under Section 2(2) of Public Debt Act, 1944, constitute a Government security and the bonds were issued by the Government for raising a public loan. Therefore, these is no doubt that the tax savings bonds issued by the RBI and sold by the appellant bank is a Government Security. For this transaction in Government securities, the appellant bank has received a brokerage for sale of the security. From the Circular dated 10-8-2010 issued by the C.B.E. C., it is clear that there is no Service Tax liability on underwriting fee or underwriting commission received by the primary dealers for dealing in Government securities; the same logic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the same Order-in-Original dt. 21.07.2009 is therefore not sustainable and is therefore set aside. 8. In view of the foregoing, impugned orders are not sustainable and the same are set aside. 9. In the result, the appeals are allowed. 5. In view of the above decision, the issue in hand is no longer res-integra. Accordingly, following the above Tribunal decision the impugned order is set-aside and the appeal is allowed. From the above decision in the appellant s own case, the issue in the present case is no longer res-integra. Hence, no further discussion is warranted to decide this appeal. 5. Accordingly, following the above Tribunal s order, we are of the view that the demand in the present case is not sustainable. Hence impugned order is set aside. Appeals are allowed. 4.1 In the case of Saurin Investments Pvt Ltd (Supra) this Tribunal has held that NSDL/CDSL charges collected by the stock broking firm cannot be liable for service tax. In the present case the charges of stock exchange are similar charges therefore following the ratio of Saurin Investments case, the same is not liable for service tax. 4.2 In the case of Indses Securities a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erpreting a taxing statute, equitable considerations are entirely out of place. Taxing statutes cannot be interpreted on any presumption or assumption. A taxing statute has to be interpreted in the light of what is clearly expressed; it cannot imply anything which is not expressed; it cannot import provisions in the statute so as to supply any deficiency; (ii) before taxing any person it must be shown that he falls within the ambit of the charging section by clear words used in the section; and (iii) if the words are ambiguous and open to two interpretations, the benefit of interpretation is given to the subject. 12.3 There is nothing unjust in the taxpayer escaping if the letter of the law fails to catch him on account of the Legislature s failure to express itself clearly. It is well settled that power to tax cannot be inferred by implication; there must be a charging section specifically empowering the State to levy tax. When these are the principles laid down by Apex Court in the case of State of West Bengal v. Kesoram Industries Ltd. - (2004) 10 SCC 201, bringing a strange element to the ambit of tax shall be without authority of law. There was no scope provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of the legislative intent from the budget speech and the express legislation in Section 67 of the Act does not leave any room for implication of ambiguity. Therefore, express grant of the statute no way leaves scope for implication to make the statutory grant ineffective. Law being well settled that there is no intendment in taxation and the State has to discharge its burden of proof to bring the subject into tax, there is no scope to bring any other element of receipt other than brokerage or commission to the scope of assessable value in respect of service provided by stock brokers. 14. Normally value is derived from the price and value is the function of the price. This is conceptual meaning of value. Section 67 is the sole repository of law governing value of taxable service provided by the stock broker. Any charge on the non-includible elements other than brokerage or commission will result in arbitrary taxation. Similarly receipts not in the nature of commission or brokerage should not be taxed in disguise. The brokerage or commission service provided by stock broker shall be liable to service tax. That being consideration for taxable service provided, become assessa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made in respective appeals are not considered in this order. 10. Similar view has been expressed recently by the Tribunal in M/s Consortium Securities Pvt Ltd. s case (supra). We do not find any reason to deviate from the ratio laid down in the aforesaid judgments of this Tribunal. We are also of the view that the allegation of the department that the demat charges collected by the brokers are banking and financial service, hence taxable, also devoid of merit in as much such charges are collected by the Appellant and paid to the depository participants viz. CDSL/NSDL who are authorised to levy such charges under the Depositories Act, 1996. Thus, in view of the aforesaid precedent, we do not find merit in impugned orders and accordingly set aside. The appeals are allowed with consequential relief, if any, as per law. 5. From the above decisions, it is settled that all the charges which are involved in the present case have been held as not the service charges of the broking firm and hence not liable to service tax and this consistent view has been taken in the other judgments cited by the appellant. Therefore, in the present case also all the charges which were collecte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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