1997 (9) TMI 1 - AT - Service Tax

Service Tax Stay/Dispensation of pre-deposit service tax No best judgment No concept of deeming proviso of evaluation of taxable service

Summary

Issues:
- Waiver of pre-deposit and stay of recovery of service tax demanded from a stock broker.
- Interpretation of Sections 66 and 67 of the Finance Act, 1994 regarding the liability of a stock broker to charge brokerage for service tax.
- Application of Section 72 of the Finance Act in determining correctness of the accounts of the assessee.
- Allegation of short-levied amount on account of improper rounding off of transaction amounts.

Analysis:
The judgment concerns a stock broker who sought waiver of pre-deposit and stay of recovery of service tax amounting to Rs. 1,98,265.00 demanded for a specific period. The issue arose when the Superintendent of Central Excise, Service Tax Cell noted that the broker had not charged brokerage on certain transactions, leading to a tax liability calculation discrepancy. The applicant contended that as per Section 67 of the Finance Act, 1994, the taxable service value is based on actual brokerage collected, not on deemed brokerage. The applicant argued that the order was unsustainable under Sections 66 and 67 of the Act, requesting unconditional allowance of the Stay Petition.

The opposing Revenue authority cited Section 72 of the Finance Act, allowing best judgment assessment when the officer doubts the accuracy of the assessee's accounts. The Revenue argued that the addition of 1% brokerage was justified due to the incomplete or incorrect accounts of the applicant. However, the Tribunal noted that the order did not explicitly reject the correctness of the accounts or provide a basis for mandating brokerage charges in all cases, thereby questioning the strength of the Revenue's case.

The Tribunal analyzed the provisions of the Finance Act and agreed with the applicant's interpretation of Section 67, emphasizing the absence of a deeming provision for valuation of taxable service based on brokerage. Consequently, the Tribunal found merit in the applicant's argument and deemed the authorities' order incorrect. As a result, the Stay Petition was unconditionally allowed, and the appeal was upheld, setting aside the impugned order, except for the amount allegedly short-levied due to improper rounding-off, which had already been paid by the applicant.

In conclusion, the Tribunal's decision centered on the correct interpretation of statutory provisions governing service tax liability for stock brokers, emphasizing the necessity for actual brokerage collection as the basis for taxation. The judgment highlighted the importance of adherence to legal provisions and the need for proper assessment of accounts under the Finance Act to ensure fair treatment of taxpayers.