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2023 (1) TMI 454 - AT - Service TaxValuation of a stock broking firm - inclusion of NSDL CSDL charges in assessable value for the purpose of service tax by the appellant - HELD THAT - It is noticed that the issue of includability of NSDL/CSDL has been considered by the tribunal in the case of M/S KUNVARJI FINSTOCK PVT LTD VERSUS C.S.T. -SERVICE TAX AHMEDABAD 2018 (12) TMI 344 - CESTAT AHMEDABAD and in the case of M/S. INNOVATE SECURITIES PVT. LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE ST, AHMEDABAD 2018 (11) TMI 1473 - CESTAT AHMEDABAD - It has been the consistent stand of the tribunal that these charges being statutory charges as per SEBI Rules should not be included for the purpose of service tax. The impugned order is set aside - Appeal is allowed.
Issues Involved:
Inclusion of NSDL & CSDL charges in assessable value for service tax by a stock broking firm. Detailed Analysis: Issue 1: Includability of NSDL/CSDL charges in assessable value for service tax - The appellant, a stock broking firm, filed an appeal against the inclusion of NSDL & CSDL charges in the assessable value for service tax. - The tribunal had previously allowed exclusion of these charges in the appellant's own case, citing a board circular. - The Commissioner (Appeals) reversed the original adjudicating authority's decision and confirmed the demand. - Previous tribunal cases supported the exclusion of these charges as they are statutory charges as per SEBI Rules and should not be included for service tax purposes. - The valuation provision under Section 67 of the Act emphasized that only the aggregate of commission or brokerage should be the measure of tax, and no implied taxation was permitted. - The Finance Act, 2001, prescribed tax on the gross amount charged by the service provider, and the value of taxable service included only certain prescribed receipts under Section 67. - The tribunal held that charges like turnover charges, stamp duty, BSE charges, SEBI fees, and DEMAT charges collected by stock brokers were not in the nature of commission or brokerage and were not taxable. - The tribunal emphasized that the correct assessable value of taxable service should be the intrinsic value of the service provided, and only receipts in the nature of commission or brokerage should be taxed. - The tribunal set aside the impugned order, stating that the charges collected were not taxable and should not form part of the gross value of taxable service. Issue 2: Allegation of department regarding demat charges as banking and financial service - The tribunal rejected the department's allegation that demat charges collected by brokers are banking and financial services and hence taxable. - It was clarified that these charges collected by the appellant and paid to depository participants authorized to levy such charges under the Depositories Act, 1996, were not taxable. Conclusion: - The impugned order was set aside, and the appeal was allowed in favor of the appellant based on previous tribunal decisions and the specific nature of the charges in question. - The tribunal highlighted the consistency in its approach regarding the treatment of such charges and emphasized the importance of clear statutory provisions in determining taxable value for service tax purposes. This detailed analysis provides a comprehensive understanding of the legal judgment, focusing on the issues involved and the tribunal's reasoning behind its decision.
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