2023 (10) TMI 744 - AT - Service Tax

Non-payment of service tax - transaction fees/ charge recovered from their customers, but applicable duty not discharged - HELD THAT - The transaction charges are payable by the Stock Brokers in terms of the Regulations issued by SEBI and these are not any fee or statutory levy that is payable by the customers of the Stock Brokers. In effect, the Stock Broker/ Appellants are recovering the fee or charges payable by them to SEBI for the conduct of business and are paying the same to SEBI. It is not the case of the appellants that the said transaction charges are payable by the ultimate customers and that as the Stock Broker Agent, they are paying the same on behalf of the customers. Therefore, these charges recovered from the customers are in the nature of consideration towards the taxable service rendered by the appellant as far as the customers are concerned. The Tribunal has already gone into the issue of the includability of transaction charges in the service tax in the case of M/S SRIRAM INSIGHT SHARE BROKERS LTD. VERSUS CST, KOLKATA 2018 (11) TMI 1383 - CESTAT KOLKATA where the Tribunal has found the legal responsibility of the payment of transaction charges was of the trading members (in this case apparently the appellant) and as levy of transaction charges from the concerned stock exchange is on the appellant and since this liability have been passed on by him on their clients, we are of the view that same need to be included in the taxable value as per the provision of Section 67 of the Finance Act, 1994. Accordingly, we find that there is no merit in the appeal on this count and same is dismissed. The appellant has not made out any case in their favour - the impugned orders do not require intervention - Appeal dismissed.

Summary

Issues:
The issues involved in the judgment are the non-payment of service tax on transaction charges recovered by stockbrokers from their clients, the inclusion of transaction charges in the assessable value for service tax, and the eligibility of Cenvat credits on documents not meeting the requirements.

Summary:

Non-payment of Service Tax on Transaction Charges:
The appellants, M/s H.B. Securities Limited, were alleged to have not paid service tax on transaction charges recovered from their clients along with brokerage. Show-cause notices were issued seeking to recover service tax for specific periods, which were adjudicated confirming the service tax demanded and imposing penalties. On appeal, the Commissioner upheld the duty demanded and penalty imposed under Section 76 while setting aside the penalty under Section 78.

Inclusion of Transaction Charges in Assessable Value:
The appellant argued that transaction charges payable to SEBI were statutory levies and should not be included in the assessable value for service tax. However, the Tribunal found that these charges, collected from customers, were in consideration towards the taxable service rendered by the appellant. The Tribunal referred to Section 67 of the Finance Act, which states that the gross amount charged by the service provider should be considered the taxable value for service tax liability. Therefore, the transaction charges were deemed includable in the taxable value.

Eligibility of Cenvat Credits:
Regarding Cenvat credits availed by the appellant on documents not meeting the approval requirements, the Tribunal held that if all requisite details were available on the documents, the substantive benefit of Cenvat credit should not be denied solely for procedural lapses. The department was directed to verify the documents again to determine the eligibility of Cenvat credits.

In conclusion, the Tribunal found no merit in the appellant's case and upheld the impugned orders, rejecting both appeals. The judgment was pronounced on 13/10/2023.