2012 (10) TMI 635 - AT - Service Tax

Forward Contract Broker - double taxation - MCX was charging turnover charges/transaction charges at 0.004% of the value of contract and charging it from the Appellants - Appellants in turn were collecting such amounts from their customers over and above their commission - whether such charges should have been included in the value of services rendered by the Appellants - Held that - If Service tax is paid by a sub-broker in respect of same taxable service provided by the stock-broker, the stock broker is entitled to the credit of the tax so paid on such service if entire chain of identity of sub-broker and stock broker is established and transactions are provided to be one and the same - tax paid by a sub-broker may not be denied to be set off against ultimate service tax liability of the stock broker if the stock broker is made liable to service tax for the self same transaction - there is a need to examine the facts whether the amount collected by the appellants is equal to the amounts on which service tax has already been paid by MCX - matter remanded to the original authority for verification of facts in view of the decision Vijay Sharma & Co. v. Commissioner - 2010 (4) TMI 570 - CESTAT, NEW DELHI .

Summary

Issues:
Whether charges collected by the appellants from their customers for turnover/transaction charges levied by MCX should be included in the value of services rendered by the appellants for the period of dispute from 1-4-2008 to 31-3-2009.

Analysis:
The appellants, engaged in providing services as Forward Contract Brokers, were collecting charges from customers for turnover/transaction charges levied by MCX. The main issue was whether these charges should be considered part of the value of services provided by the appellants. The appellants argued against double taxation, stating that MCX had already paid service tax on these charges. They relied on previous Tribunal decisions related to charges levied by Stock Exchanges to support their stance.

The Revenue's argument was that the appellants had not provided evidence showing that MCX had actually paid tax on the charges collected. The Revenue contended that since the appellants needed the services of MCX to provide services to customers, the charges should be considered part of the value of services rendered by the appellants, subject to service tax.

The Tribunal noted the absence of provisions for double taxation in the Finance Act, 1994, emphasizing that service tax is a single point tax without multiple taxation. Referring to a previous decision, the Tribunal highlighted the possibility of set off if the sub-broker (MCX) had already paid service tax on the same taxable service. However, the Tribunal found the need to verify whether the amounts collected by the appellants matched those on which service tax had been paid by MCX. Consequently, the matter was remanded to the original authority for further examination of facts, requiring the appellants to provide supporting documents for their submissions.

In conclusion, the Tribunal waived the pre-deposit requirement and proceeded to decide the appeal due to the issue being previously decided in favor of the appellants. However, the case was remanded for verification of facts regarding the charges collected by the appellants to determine if service tax had already been paid by MCX. The stay petition and appeal were disposed of accordingly.