2018 (5) TMI 1463 - AT - Service Tax

Liability of service tax - sub-broker - N/N. 25/2004-ST dated 10.09.2004 - Held that - there is-no infirmity in the impugned order as the Commissioner (Appeals) has considered the relevant Notification issued by the Department and has also considered the precedent decision on the same issue. On an identical issue, this Tribunal in AMH TRADE SERVICE VERSUS COMMISSIONER OF C. EX., CUS. & S.T., CALICUT 2015 (12) TMI 267 - CESTAT BANGALORE has considered the similar issue and has allowed the appeal of the assessee. The demands in this case on the appellant have arisen on the ground that the appellants have acted as sub-brokers for commodity trading. N/N. 3/2014-S.T. exempts service tax payable on the services provided by an authorized person or sub-broker to the member of a recognized association or a registered association in relation to a forward contract during the period from 10-9-2004 to 30-6-2012. Appeal dismissed - decided against Revenue.

Summary

Issues:
- Appeal against Commissioner (Appeals) order allowing the assessee's appeal and setting aside the Order-in-Original.
- Classification of services provided by the appellant under Business Auxiliary Service.
- Interpretation of relevant Notifications and case laws to determine tax liability.
- Consideration of the recipient-provider relationship between the appellant and the principals.
- Examination of the statutory status of sub-brokers and their tax liability.
- Application of Notifications exempting payment of service tax in specific scenarios.
- Comparison with previous Tribunal decisions on similar issues.

Analysis:

1. Appeal against Commissioner (Appeals) order:
The Revenue filed eight appeals against the common order passed by the Commissioner (Appeals) allowing the assessee's appeal and setting aside the Order-in-Original. The issue in all appeals was identical, leading to a common disposal. The Tribunal proceeded to decide the Revenue's appeals on merit, considering the absence of representation from the respondent.

2. Classification under Business Auxiliary Service:
The Revenue argued that the appellant's services fall under Business Auxiliary Service, making them liable for service tax. The original authority concluded that the appellant promoted and marketed services provided by two principals, classifying them under Section 65(19)(vi) of the Finance Act 1994. However, the Commissioner (Appeals) disagreed, leading to the present appeal.

3. Interpretation of Notifications and case laws:
The Commissioner (Appeals) considered relevant Notifications and precedent decisions while allowing the assessee's appeal. Notably, Notification No. 25/2004-ST dated 10.09.2004 and subsequent Notifications exempted specific services from service tax, including those rendered by sub-brokers. Case laws like Vijay Sharma & Company, Unique Investment Centre, and Shakti Securities clarified the non-taxability of brokerage in the hands of sub-brokers.

4. Recipient-provider relationship and statutory status of sub-brokers:
The Commissioner highlighted the recipient-provider relationship between the appellant and the principals, emphasizing the role of sub-brokers in the transactions. The special status of sub-brokers, recognized by SEBI regulations and statutory instruments, played a crucial role in determining tax liability.

5. Exemption under specific Notifications:
Notifications such as 31/2009-ST and 03/2014-ST further clarified the exemption of sub-brokers from tax liability in certain scenarios, reinforcing the non-taxability of activities related to the sale and purchase of securities and commodities.

6. Comparison with previous Tribunal decisions:
The Tribunal referenced previous decisions, including Final Order Nos. 21028-21029/2015 and 22110-22113/2014, where similar issues were considered, and the appeals of the assessee were allowed. By following the ratios of these decisions, the Tribunal upheld the Commissioner (Appeals) order, dismissing all appeals of the Revenue.

In conclusion, the Tribunal found no infirmity in the impugned order passed by the Commissioner, leading to the dismissal of the Revenue's appeals based on the considerations of relevant Notifications, case laws, and the statutory status of sub-brokers.