2008 (12) TMI 103 - AT - Service Tax

Business of stock broker services - handling charges collected by them from their customers includibility in value of taxable service held that expenses incurred for handling shares and securities and should be kept out of the purview of the taxable service in respect of stock broker services

Summary

Issues:
- Whether handling charges collected by the appellant from customers should be included in the taxable value for Service Tax purposes.

Analysis:
The appeal was filed against an Order-in-Revision passed by the Commissioner, Hyderabad-II Commissionerate, holding the appellant liable to pay Service Tax for a specific period. The appellant, engaged in stock broker services, had collected handling charges for physical delivery of shares to customers. The Commissioner found the appellant liable for Service Tax, interest, and penalties. The appellant contended that the issue was covered by a previous Tribunal order. The Tribunal considered submissions from both sides and examined the records. It was established that the handling charges were collected for physical delivery of shares, not as commission or brokerage for securities. The Tribunal referenced relevant provisions of the Finance Act and a dictionary definition of brokerage to support its decision. Ultimately, the Tribunal ruled that handling charges were not part of the taxable value for stock broker services, aligning with a previous case precedent.

In conclusion, the Tribunal found in favor of the appellant, setting aside the Commissioner's order and allowing the appeal. The decision was based on the understanding that handling charges were not akin to commission or brokerage and should not be included in the taxable value for Service Tax purposes. The Tribunal's ruling was consistent with the precedent set in a similar case, where handling charges were considered expenses related to handling shares and securities, exempt from taxation in stock broker services.