2017 (9) TMI 418 - AT - Service Tax

Stock broking services - services provided to the clients located in Jammu and Kashmir - levy of tax - Held that - Tribunal in the case of Religare Securities Ltd. Vs. CST Delhi 2014 (4) TMI 588 - CESTAT NEW DELHI has held that in terms of the section 64 of the Finance Act 1994, discharging of service tax has been exempted in the case of services provided in Jammu and Kashmir region - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Liability of service tax on stock broking services provided in the state of Jammu and Kashmir.

Detailed Analysis:
The appellant, M/s. Vivek Financial Focus Ltd., appealed against the confirmation of liability for service tax on stock broking services provided to clients in Jammu and Kashmir. The Department conducted an audit and found that the appellant did not pay service tax on brokerage received from clients in Jammu and Kashmir. A show cause notice was issued, and the liability of service tax was confirmed. The appellant contested this demand through the appeal process, which led to the matter being brought before the Tribunal.

Upon hearing both sides and considering the facts presented, the Tribunal delved into the legal provisions regarding the levy of service tax in Jammu and Kashmir. It was noted that Section 64 of the Finance Act 1994 explicitly states that the provisions for service tax do not extend to the state of Jammu and Kashmir. This legal position was further supported by an instruction letter from the Central Board of Excise and Customs, Ministry of Finance, emphasizing that service tax does not apply to services provided in Jammu and Kashmir, regardless of the service provider's location.

Additionally, the Tribunal referred to a previous case involving Religare Securities Ltd. where it was established that services provided in Jammu and Kashmir fall outside the purview of service tax liability as per Section 64 of the Finance Act 1994. The Tribunal in the aforementioned case highlighted that the nature of service tax being destination-based, services rendered by sub-brokers in Jammu and Kashmir to clients in the same region are not taxable. The Tribunal upheld the principle that the location of service consumption determines the liability of service tax, ultimately rejecting the Revenue's appeal in that case.

Consequently, based on the legal provisions and precedents cited, the Tribunal set aside the order confirming the liability of service tax and penalty on stock broking services provided to clients in Jammu and Kashmir. The appeal was allowed in favor of the appellant, M/s. Vivek Financial Focus Ltd., with the judgment pronounced in open court on 28.07.2017.