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2023 (9) TMI 413 - AT - Service TaxNon-payment of service tax - NSDL and CSDL fee paid to Depositories - tax on reverse charges basis on the expenses reimbursed to the representative liaison offices located outside India - delayed payment charges - services rendered to Jammu and Kashmir clients through its sub brokers in Jammu and Kashmir - Inadmissible CENVAT Credit on account of medical insurance of the employees of the respondent - HELD THAT - It is true that the issue involved has been decided by the Tribunal in the aforesaid decisions and it has been held that the statutory charges such as NSDL and CSDL fee collected by the Depository Participants from customers and deposited with the Depositories (NSDL and CSDL) are not susceptible to service tax. These charges have a nexus or connection with the depository services and the respondent is not benefited out of collection of such fees as such fees are collected and deposited with the depositories. This is what has been held by the Tribunal in SAURIN INVESTMENTS PRIVATE LIMITED VERSUS C.S.T. -SERVICE TAX AHMEDABAD 2023 (1) TMI 454 - CESTAT AHMEDABAD and LSE SECURITIES LTD. VERSUS CCE 2012 (6) TMI 364 - CESTAT, NEW DELHI . It is not possible to accept the contention advanced on behalf of the department that the circular dated 23.08.2007 is retrospective in nature. The said Circular supersedes all the past Circulars, clarifications and communications on all technical issues. The said Circular brought certain transaction within the ambit of the service tax - the Circular dated 23.08.2007 is oppressive in nature and it is a settled principal of law that an oppressive Circular should be given only prospective effect. Reimbursement of the expenses incurred by the representative offices located outside India - HELD THAT - The reimbursement of the expenses incurred by the representative offices located outside India with respect to rent, professional services, salaries of employees can by no stretch of imagination be equated as consideration to any service rendered to the respondent by the representative offices. Therefore, the reimbursements made to representative offices located outside India is not leviable to service tax. The Commissioner has relied upon the decision of the Tribunal in M/S TECH MAHINDRA LTD., MILIND KULKARNI VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE - I 2016 (9) TMI 191 - CESTAT MUMBAI to drop the demand. It is not the contention of the department that the said decision does not cover this issue and all that has been contended is that it should not have been relied upon by the Commissioner since notice has been issued by the Supreme Court in the Civil Appeal filed by the department. This contention of the learned authorized representative of the department cannot be accepted. There is no merit in the appeal. It is, accordingly, dismissed.
Issues involved:
The issues involved in this case are the liability of service tax on NSDL and CSDL fee paid to depositories and the taxability of expenses reimbursed to representative liaison offices located outside India. Issue 1: Liability of service tax on NSDL and CSDL fee: The appeal was filed by the Department challenging the dropping of proceedings against the respondent by the Commissioner regarding the payment of service tax on NSDL and CSDL fee. The respondent, a stockbroker engaged in trading securities, paid service tax on depository charges from April 2006 to August 2007, deducting NSDL and CSDL fees. However, from September 2007 onwards, the respondent paid service tax on the gross value of depository charges. The Commissioner dropped the demand on the NSDL and CSDL fee, citing circulars clarifying that such fees are not taxable under service tax. The Department argued that the circular dated 23.08.2007 should be applied retrospectively, making the service tax payable for the earlier period. The Tribunal, supported by the respondent's counsel, upheld the Commissioner's decision, stating that statutory charges like NSDL and CSDL fees are not subject to service tax. Issue 2: Taxability of expenses reimbursed to representative offices outside India: The second issue pertained to the taxability of expenses reimbursed to representative liaison offices established outside India by the respondent. The Department contended that the Tribunal's decision in a related case, which the Commissioner relied on to drop the demand, was under appeal before the Supreme Court. The respondent argued that the reimbursements made to the representative offices were not for services rendered but for expenses incurred, hence not subject to service tax. The Tribunal agreed with the respondent, emphasizing that the reimbursements were not consideration for services provided to the respondent. The Department's argument that the Tribunal's decision should not have been relied upon due to the pending appeal was rejected, and the appeal was dismissed based on these grounds.
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