2018 (4) TMI 543 - AT - Service Tax

Levy of service tax - turnover charges paid by the assesse to the Stock Exchanges which was collected from the clients - Held that - this Tribunal following the judgment in LSE Securities Limited case 2012 (6) TMI 364 - CESTAT, New Delhi decided the issue in favor of the assessee - demand set aside. Valuation - inclusion of reimbursement expenses - Computer Linkage Charges collected from the sub broker and paid to the Commodity Exchange in the value of Forward Contract Service Charges - Held that - the said issue is no more res-integra, in view of the principle laid down by the Hon ble Supreme Court in Intercontinental Consultants and Technocrats Pvt. Ltd. s case 2018 (3) TMI 357 - SUPREME COURT OF INDIA , where it was held that the service tax is to be paid only on the services actually provided by the service provider - demand set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Challenge to dropping of Service Tax levy on turnover charges by the Revenue.
2. Challenge to confirmation of demand on Computer Linkage Charges by the assessee.

Analysis:
1. The appeals were filed by both the Revenue and the assessee challenging the same order passed by the Commissioner of Central Excise (Appeals-IV) Ahmedabad. The Revenue contested the dropping of Service Tax levy on turnover charges paid by the assessee to the Stock Exchanges, while the assessee challenged the confirmation of demand on Computer Linkage Charges paid to the Stock exchanges and collected from the sub brokers.

2. The assessee's advocate argued that the Computer Linkage Charges collected from sub brokers were not related to forward contract services and should not be taxable under Forward Contract Service. Citing a recent Supreme Court judgment, the advocate contended that the charges were merely collected and deposited with the Stock Exchange, making the reliance on Rule 5(1) of Service Tax (Determination of Value) Rules, 2006 incorrect. Additionally, the advocate supported the order of the Ld. Commissioner (Appeals) on the levy of service tax on turnover charges, citing a judgment of the Tribunal in a similar case.

3. The Revenue's representative reiterated the grounds of appeal and supported the Ld. Commissioner (Appeals) on rejecting the Computer Linkage Charges. After hearing both sides and examining the records, the Tribunal ruled in favor of the assessee on the issue of levy of service tax on turnover charges, following precedent. Regarding the inclusion of Computer Linkage Charges in the value of Forward Contract Service Charges, the Tribunal referred to a Supreme Court judgment highlighting legislative amendments that clarified the treatment of reimbursable expenses in service tax valuation. The Tribunal concluded that the Revenue's appeal lacked merit, dismissing it, and allowed the assessee's appeal.

4. The Tribunal's decision was based on the interpretation of relevant legal provisions and judicial precedents, emphasizing the importance of legislative intent and fairness in applying tax laws retrospectively. The judgment provided a detailed analysis of the legislative changes and principles of statutory interpretation, ultimately leading to the dismissal of the Revenue's appeal and the allowance of the assessee's appeal.