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2024 (1) TMI 248 - AT - Service TaxLevy of service tax - banking and other financial services - Demat/ Depository charges collected from sub brokers - stock broker service - Transaction/ administrative charges collected from sub-brokers - VSAP/TWS charges collected from sub broker - HELD THAT - All the charges on which service tax was demanded by the Revenue are statutory charges which are though collected from the sub- brokers but the same was deposited to the stock exchange i.e. Vadodara Stock Exchange Clearing House, Bombay Stock Exchange National Stock Exchange , therefore, these charges were not collected as service charge of the appellant but only as reimbursement which was paid to the stock exchange. Therefore, these charges cannot be considered as the service charge of any services provided by the appellant to their sub-broker. These issues have been consistently decided in various judgments cited by the appellant. In the case of Edelweiss Financial Advisor Ltd. 2023 (9) TMI 522 - CESTAT AHMEDABAD it has set aside the demand of service tax on computer to computer linkage service. In the case of Saurin Investments Pvt Ltd 2023 (1) TMI 454 - CESTAT AHMEDABAD this Tribunal has held that NSDL/CDSL charges collected by the stock broking firm cannot be liable for service tax. Thus, it is settled that all the charges which are involved in the present case have been held as not the service charges of the broking firm and hence not liable to service tax and this consistent view has been taken in the other judgments cited by the appellant. Therefore, in the present case also all the charges which were collected on behalf of the stock exchange are not liable to Service Tax. The impugned orders confirming the demand of service tax are set aside - Appeal allowed.
Issues Involved:
1. Whether Demat/Depository charges collected from sub-brokers are liable to service tax under banking and other financial services. 2. Whether transaction/administrative charges collected from sub-brokers are liable to service tax under the head of stock broker service. 3. Whether VSAP/TWS charges collected from sub-brokers are liable to service tax under the head of stock broker service. Summary: 1. Demat/Depository Charges: The appellant, a stock broker, collected DEMAT and depository charges which were paid to Vadodara Stock Exchange Clearing House, a registered depository participant. The appellant did not have the necessary statutory permission to act as a depository participant. The charges collected were statutory and deposited with the stock exchange, not retained as service charges. The Tribunal referred to previous judgments, including Edelweiss Financial Advisor Ltd vs. CCE & ST, which consistently held that such charges, collected and paid to statutory bodies, are not liable for service tax. The Tribunal concluded that these charges are not service charges of the appellant and thus not subject to service tax. 2. Transaction/Administrative Charges: The transaction and administrative charges collected by the appellant on behalf of stock exchanges (BSE/NSE) were paid to them. The appellant argued that these charges are statutory and not service charges. The Tribunal, referencing similar cases, including Indses Securities and Finance Ltd, ruled that such charges, collected as reimbursements for statutory payments, do not form part of the taxable value of services provided by the appellant. Therefore, these charges are not liable for service tax. 3. VSAP/TWS Charges: VSAP/TWS (Computer to Computer Linkage) charges collected by the appellant were also paid to the respective stock exchanges. The Tribunal cited previous decisions, including the appellant's own case in Edelweiss Financial Advisor Ltd, where it was held that charges for computer linkage services, collected and paid to the stock exchange, are not service charges of the appellant. Thus, these charges are not subject to service tax. Conclusion: The Tribunal found that all charges in question were statutory and collected on behalf of stock exchanges, not retained as service charges by the appellant. Consistent with previous judgments, these charges do not form part of the taxable value of services provided by the appellant. Consequently, the impugned orders confirming the demand for service tax were set aside, and the appeals were allowed with consequential relief. Pronouncement: The judgment was pronounced in the open court on 03.01.2024.
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