2018 (9) TMI 579 - AT - Service Tax

SSI Exemption - Whether the Service Provided by the Sub-Broker of main Stock-broker is branded Service and not eligible for small scale exemption up to aggregate gross value of ₹ 4 Lakhs in the financial year? - Whether the Service provided by Sub-broker of Stock-Broker is per se liable to Service Tax or otherwise? Held that - The appellant is acting as a commission agent on behalf of the Stock-broker, the entire deal of Stock trading is between Stock broker and ultimate client. In this fact it cannot be said that the appellant s service is a branded service. Moreover, the appellant is providing services to the Stock-broker the issue of service being branded could arise only when branded service is provided to a person other than the brand name owner - Only by using the brand of third person which is not the case here, therefore, the service provided by the appellant cannot be treated as branded service of another person - There is no dispute that the aggregate value of the service provided by the appellant in a financial year is well within the exemption limit of ₹ 4 Lakhs. Therefore, they are clearly eligible for small scale exemption provided under Notification No.06/2005-ST. The demand of Service Tax is not sustainable - Since, we are deciding the matter only on the first issue of small scale exemption Notification, we do not incline to address the issue of taxability of Sub-broker during the relevant period. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Whether the service provided by the Sub-Broker of the main Stock-broker is branded service and not eligible for small scale exemption.
2. Whether the service provided by the Sub-broker of Stock-Broker is per se liable to Service Tax.

Analysis:
1. The appellant, a Sub-broker, claimed small scale exemption up to ?4 Lakhs, arguing that they act as a commission agent of the Stock-broker and do not provide branded services. The appellant contended that the Budget Changes clarified that the entire brokerage amount with the Stock-broker is taxable, making the Sub-broker not liable to pay Service Tax. Citing various judgments, the appellant supported their eligibility for exemption under Notification No. 06/2005-ST.

2. The Revenue, represented by the Superintendent (AR), supported the findings of the impugned order denying the exemption. However, the Tribunal, comprising Mr. Ramesh Nair and Mr. Raju, examined the submissions and records. They noted that the appellant, acting as a commission agent for the Stock-broker, facilitates Stock trading between the Stock-broker and the client. The Tribunal concluded that since the appellant's services are not branded and the aggregate value falls within the exemption limit, they are eligible for the small scale exemption under Notification No. 06/2005-ST.

3. The Tribunal held that the demand for Service Tax was not sustainable based on the first issue of small scale exemption. Consequently, they did not address the taxability of the Sub-broker during the relevant period. The impugned order was set aside, and the appeal was allowed in favor of the appellant. The judgment was pronounced in open court on 17.08.2018.