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Issues involved: Demand for service tax on a sub-broker under the category of 'Business Auxiliary Service' and the applicability of Circular issued by the Board regarding payment of service tax by sub-brokers.
Summary: The Appellate Tribunal CESTAT BANGALORE considered the demand for service tax on the appellant, a sub-broker of a financial services company, and the issue of whether the sub-broker is liable to pay tax when the stock-broker has already paid the tax. The proceedings resulted in the confirmation of the demand for service tax with interest and penalty. The appellant relied on a Circular issued by the Board to support their case. The Tribunal noted that the Circular excluded sub-brokers from the purview of Service Tax after 1-6-2005 and emphasized that there could not have been a demand against the appellant. The original authority's refusal to accept the confirmation from the financial services company regarding payment of service tax further supported the Tribunal's decision. The Tribunal allowed the appeal, stating that the impugned order had no merit and provided consequential relief to the appellant. The Tribunal waived the requirement of pre-deposit and proceeded to take up the appeal for final decision due to the issue being of a short compass. The demand for service tax on the appellant was based on the allegation of failure to pay service tax under the category of 'Business Auxiliary Service'. The appellant's argument was supported by a Circular issued by the Board, which stated that sub-brokers are not liable to pay tax if the stock-broker has already paid it. The Tribunal considered the submissions from both sides and highlighted the Circular's observation regarding the exclusion of sub-brokers from the purview of Service Tax post-1-6-2005. The Tribunal also noted the original authority's reluctance to accept the confirmation of service tax payment by the financial services company, despite the letter provided. The Tribunal concluded that there could not have been a demand against the appellant after 1-6-2005 and allowed the appeal, emphasizing the lack of merit in the impugned order. The Tribunal's decision was based on the Circular issued by the Board, which clarified that sub-brokers should not be charged to Service Tax as commission agents under Business Auxiliary Service. The Tribunal highlighted that the Circular's exclusion of sub-brokers from Service Tax liability after 1-6-2005 meant that there should not have been a demand against the appellant. The Tribunal also pointed out the original authority's failure to accept the confirmation of service tax payment by the financial services company, despite the letter provided. The Tribunal emphasized that the impugned order had no merit and allowed the appeal, providing consequential relief to the appellant.
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