2007 (6) TMI 121 - AT - Service Tax

Department contended that appellant was a sub-broker and engaged in the activity of a stock broker which attracts service tax and demanded accordingly. Services of sub-broker was included with effect from 10-09-2006 vide Finance Act, 1994 - pre-deposit service tax waived

Summary

Issues:
1. Challenge to the Commissioner (Appeals) order regarding service tax demand on share brokering services.
2. Interpretation of the Finance Act, 1994 regarding the definition of a stock broker and sub-broker for service tax liability.

Analysis:
1. The Commissioner (Appeals) upheld the demand of service tax on the appellant, who contended they were sub-brokers, not stock brokers. The Commissioner found that the appellant acted as share brokers, provided stock brokering services, and charged brokerage, thereby confirming the service tax liability. The Commissioner also upheld penalties under Sections 76, 77, and 78 for violations of Sections 68 and 70 of the Act.

2. The appellant argued that they were sub-brokers to a securities firm and should not be liable for service tax as they were not registered as stock brokers under SEBI regulations during the relevant period. The appellant relied on an amendment to the Finance Act, 2004, which brought sub-brokers under the service tax net. The Departmental Representative contended that the appellant, although a sub-broker, engaged in activities attracting service tax as a stock broker.

3. The Tribunal analyzed the Finance Act, 1994, defining taxable services provided by stock brokers in connection with securities listed on recognized stock exchanges. The appellant, as a sub-broker during the relevant period, was not registered as a stock broker under SEBI regulations. The Tribunal found that the appellant made a case for waiver of duty and penalties, directing no pre-deposit requirement for the appeal hearing.

4. The Tribunal concluded by disposing of the application accordingly, allowing the appeal to proceed without pre-deposit requirements for further hearing on the service tax demand issue related to the appellant's status as a sub-broker and liability under the Finance Act, 1994.