2008 (4) TMI 205 - AT - Service Tax

Finding of Commissioner that the appellant was registered as stock-broker by SEBI does not stand rebutted by the appellant appellant s plea that they were actually working as sub-broker, have no any merits - they are admittedly covered by the definition of stock-broker - fact that they might have acted in some cases as sub-broker itself will not make any difference - Commissioner has rightly held them liable to deposit the amount of Service tax so collected, in terms of Section 11D

Summary

Issues:
1. Whether the appellant is liable to pay Service tax as a stock-broker.
2. Applicability of Section 11D of the Central Excise Act, 1944.
3. Validity of the Commissioner's order.

Analysis:
1. The issue in question revolves around determining the liability of the appellant to pay Service tax as a stock-broker. The original adjudicating authority initially dropped the proceedings, stating that the appellant, being a sub-broker, was not liable for Service tax. However, the Commissioner reversed this decision based on the appellant's possession of a Registration Certification as a stock-broker issued by SEBI. The Commissioner found that the appellant provided taxable services as a stock-broker by buying and selling securities, as per the definition under the Finance Act, 1994. The Commissioner held that the appellant's dual identity as a stock-broker and sub-broker did not exempt them from their liability to pay Service tax. The Commissioner concluded that all necessary elements for levying Service tax on the services provided by the appellant were present, leading to the applicability of Section 11D of the Act.

2. The applicability of Section 11D of the Central Excise Act, 1944 was a crucial aspect of the judgment. Section 11D mandates that if a person liable to pay duty collects any amount in excess of the duty assessed or determined, representing duty of Excise (here Service tax), it must be paid to the Central Government. The Commissioner found that the appellant collected Service tax from their customers but failed to deposit it with the Revenue. Therefore, the Commissioner held the appellant accountable to deposit the amount of Service tax collected in accordance with Section 11D. The Deputy Commissioner's view that the Central Excise Department could not recover the amount under Section 11D was dismissed by the Commissioner, emphasizing the appellant's obligation to pay the collected Service tax to the Central Government.

3. The validity of the Commissioner's order was challenged in the present appeal. The appellant contended that they were actually working as a sub-broker, not a stock-broker, despite holding a Registration Certification as a stock-broker. However, the Commissioner found no merit in this argument, stating that the appellant fell under the definition of a stock-broker as per the Act. The Commissioner upheld the decision that the appellant was liable to deposit the collected Service tax amount, rejecting the appeal. The judgment highlights the importance of adhering to regulatory definitions and obligations in determining tax liabilities and obligations.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT AHMEDABAD underscores the legal intricacies surrounding the liability of the appellant for Service tax as a stock-broker, the application of Section 11D, and the Commissioner's decision based on regulatory definitions and obligations.