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TMI Blog2012 (6) TMI 364X X X X Extracts X X X X X X X X Extracts X X X X ..... /90/07 CCE, Ludhiana vs. LSE Securities Ltd. -do- -do- 2. While assessee is in appeal No. ST/81/2008 Revenue has filed appeal No. ST/90/2008 against LSE Securities and against appeal of Revenue, assessee (LSE Securities) has filed Cross Objection which is registered as ST/CO/145/2008. Revenue's appeal against Order-in-Appeal dated 29.10.2007 is against waiver of penalties. Appeal No.ST/3/2007 3.1 Appeal No. ST/3/2007 filed by Assessee is against adjudication order passed by the learned Commissioner on 24.7.2006 giving rise to levy of service tax of Rs. 7,45,634/-followed by interest and penalty on the receipt of Rs. 52,44,951/- and Rs. 60,42,324/- for the period 5.10.2000 to 13.5.2003 and 14.5.2003 to 9.9.2004 respectively on account of receipt of Stock Exchange "turnover charge" which were contended to have been paid to Bombay Stock Exchange/Jaipur Stock Exchange under the provisions of the Act. 3.2 Challenging the Adjudication Order dated 11.7.2006 it was submitted by Shri Mahajan, learned Counsel on behalf of the appellant M/s. JSEL Securities Ltd. that "turnover charges" recovered by the appellant were paid to Bombay Stock Exchange (BSE)/Jaipur Stock Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he adjudication being interpretation of law, the appellant cannot be made liable to service tax and extended period of limitation shall not apply. Similarly, penalty was also not imposable for the reasonable belief of the appellant that no tax liability arose in its case for the impugned period and it was also governed by provisions of Section 80 of Finance Act, 1994. ARGUMENTS ON BEHALF OF APPELLANT IN APPEAL NO. ST/90 and 81/08 and C.O./145/08 4.1 Shri J.K. Mittal, learned Advocate appearing on behalf of appellant M/s. LSE Securities Ltd. in appeal No. ST/81/09 filed by the assessee and ST/90/08 filed by Revenue as well as in C.O./145/08 against appeal of Revenue, submitted that show cause notice dated 28.3.2006 demanding service tax for the period December, 2000 to March, 2004 invoking taxing entry under Section 65(105) (a) dealing with "stock broking service" was unwarranted when the appellant was registered with the authority since 11.7.2000 and paying service tax on brokerage and commission under the said taxing entry and that was well within the knowledge of the Appellant. 4.2 According to the appellant, the dispute involved in appeal is levying of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remitted to SEBI as well as other authorities under respective laws. These charges are not includible in gross value of taxable service provided not being consideration of appellant and not subjected to service tax. 4.5 It was further argued that levy of service tax on stock broker was intended to be made by Section 67 of the Act and that section under went amendment from time to time. When the service tax was levied for first time on stock broker service in the fear 1994, there was a separate clause for taxing the value of taxable service under Section 67 which read as under: W.e.f. 01.07.1994 to 15.7.2001 The value of taxable service:- "(a) in relation to service provided by a stock-broker, shall be the aggregate of the commission or brokerage charged by him on the sale or purchase of securities from the investors and includes the commission or brokerage paid by the stock-broker to any sub-broker" W.e.f. 15.07.2001 to 17.04.2006 Section 67 was substituted by a new section w.e.f. 16.07.2001, which read as under: "The value of any taxable service shall be the gross amount charged by the service provider for such service rende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned Counsel relied on Board's Instruction M.F. (D.R.) Circular No. 32/3/2000-CX, dated 20.12.2000, Master Circular No. 96/7/2007, dated 23.8.2007, and Instruction F. No. 137/25/2011-ST, dated 3.8.2011 . It was further submission of learned Advocate that what that is received by stock exchanges having been taxed in terms of entry 65(105)(zzzg) w.e.f. 16.5.2008 that recognises that the aforesaid three receipts made by the appellant were not its receipts but the receipts of the stock exchanges. Therefore, following instructions in F. No. 137/57/2005-CX-4 dated 18.5.2007 in terms of Para 4 thereof, it was clarified by the Board that service provided by stock exchange not hitherto taxed were intended to be taxed w.e.f. 16.5.2008. To support such contention, he relied on the decision on Steel City Securities Ltd. v CCE and C, Hyderabad-II 2009 (14) STR 479 (Tri.-Bang.) and First Securities Private Limited v. CST, Bangalore 2007 (7) STR 690 (Tri.-Bang.) and CCE, Indore v M/s. Indira Securities Final Order No. ST/337-339/11). According to him, once the issue has been settled in favour of the assessee, service tax cannot be levied by repetitive litigation by Revenue. Also following N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d is bad. The appellant was under bona fide belief that what was not due to it but was collected on behalf of BSE, SE5I, and other statutory authorities shall not form part of its gross value of consideration received. Remittance of the collected amount was made to the concerned statutory authorities which is not in dispute. The appellant discharged entire tax liability on the brokerage received and nothing remained unpaid by it to the service tax authorities. Therefore, extended period of limitation is not invokable following the decision of Apex Court in the case of CCE, Aurangabad vs. Bajaj Auto Ltd. - 2010 (260) ELT 17 (SC) (para 12,15 and 16); Jaiprakash Industries Ltd. vs. CCE, Chandigarh - (2003) 1 SCC 67: 2002 (146) ELT 481 (SC) and Continental Foundation Jt. Venture v. CCE, Chandigarh-I -2007 (216) ELT 177 (SC). 4.10 It was further argument that when a levy was under dispute and under series of confusion to the tax payers, no mala fide can be attributed to it following instruction No. 187/107/2010-CX-4 dated 17.9.2010 of Board. When the appellant discharged its tax liability on the brokerage/commission, period of limitation cannot be extended in such circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed violating principle of natural justice. Nothing was recoverable from the appellant as there was no liability because stock broker service envisages service in connection with sale or purchase of securities to any person and does not cover any other receipt. Demat account-is maintained with depository. Stock broker purchases/sells shares on behalf of his client and charges brokerage thereon. Such brokerage is taxable. After transaction of sale/purchase, the delivery of share is routed through Demat account of broker. On such transactions, the depository levy charges. Such charges are levied in different forms i.e. market stakes, inter-depository charges, custody charges. Since stock broker does transaction of purchase or sale he recovered the Demat charges from his client to pay to depository. Recovery of Demat charges is linked with transfer of shares from Demat account of broker to client or vice versa. Therefore, collection is not at all relevant to the act of sale/purchase of securities. Demat charges by no stretch of imagination can be treated as part of brokerage. The appellant charges brokerage/commission separately in the contract note and Demat charges being payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Niminath Fabrics (P) Ltd. - 2010 (256) ELT 369 (Guj.) brings them to the fold of levy of tax which has escaped originally. Accordingly, not only tax should be levied, penalty should also be levied. 9. Opposing the contention of Revenue, it was submitted on behalf of the assessee in Rejoinder that Revenue's appeal is without review order on opinion and Revenue cannot invoke extended period without appreciating facts and circumstances, including Budget speech making clear that service tax was not imposed on any receipt other than commission or brokerage. Whatever information was sought it was provided during investigation. There was no suppression. The interim order passed in Shriram Insight Broker Ltd. shall not bind the Division Bench while drawing conclusion in appeal. The appellants are entitled to the benefit of Apex Court judgement in the case of Bajaj Auto - 2010 (260) ELT 17 (S.C.). 10. Heard both sides and gone through different nature of receipts stated before us in these appeals which called for determination as to whether liable to service tax and also have gone through provision of the law with the principle laid down in various citations made before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding authority flowing from several pronouncements of the Hon'ble Supreme Court has settled these principles: (i) in interpreting a taxing statute, equitable considerations are entirely out of place. Taxing statutes cannot be interpreted on any presumption or assumption. A taxing statute has to be interpreted in the light of what is clearly expressed; it cannot imply anything which is not expressed; it cannot import provisions in the statute so as to supply any deficiency; (ii) before taxing any person it must be shown that he falls within the ambit of the charging section by clear words used in the section; and (iii) if the words are ambiguous and open to two interpretations, the benefit of interpretation is given to the subject. 12.3 There is nothing unjust in the taxpayer escaping if the letter of the law fails to catch him on account of the legislature's failure to express itself clearly. It is well settled that power to tax cannot be inferred by implication; there must be a charging section specifically empowering the State to levy tax. When these are the principles laid down by Apex Court in the case of State of West Bengal vs. Kesoram ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at was intended to be taxed by the budget of 1994-95. This was the proposal in Part 'B' of the Budget presented to the Parliament on 28th February, 1994. Reading of the legislative intent from the budget speech and the express legislation in section 67 of the Act does not leave any room for implication of ambiguity. Therefore, express grant of the statute no way leaves scope for implication to make the statutory grant ineffective. Law being well settled that there is no intendment in taxation and the State has to discharge its burden of proof to bring the subject into tax, there is no scope to bring any other element of receipt other than brokerage or commission to the scope of assessable value in respect of service provided by stock brokers. 14. Normally value is derived from the price and value is the function of the price. This is conceptual meaning of value. Section 67 is the sole repository of law governing value of taxable service provided by the stock broker. Any charge on the non-includible elements other than brokerage or commission will result in arbitrary taxation. Similarly receipts not in the nature of commission or brokerage should not be taxed in disg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d shall not form part of gross value of taxable service. On merit, all the appellants succeed on the fundamental principles of taxation. Therefore, other contentions on merit made in respective appeals are not considered in this order. Time Bar 17. It was pleadings of all the appellants that their case do not attract provisions of section 73 of Finance Act, 1994. It appears that the scheme of levy introduced in union Budget of 1994 made clear to impose service tax on commission and brokerage received by stock brokers from investors. Reliance of appellants on budget speech and different communications of Board as well as various citations make clear that there persisted several confusions between Revenue and appellants in respect of determination of assessable value of taxable service provided by stock brokers. Their bonafide belief appears to be clear when there was no levy on receipts other than commission or brokerage received by stock broker from investors. Suppression of material facts cannot be said to have been made when the commission or brokerage received were disclosed in their service tax returns and taxes were paid thereon. The circumstance in which suppression ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d deliberately to evade payment of duty, when facts were known to both the parties, the omission by one to do what he might have done not that he must have done would not render it suppression. It is settled law that mere failure to declare does not amount to willful suppression. There must be some positive act from the side of the assessee to find willful suppression. Accordingly when there is no deliberate intention on the part of the appellant not to disclose the correct information or to evade payment of duty, it is not open to the Central Excise Officer to proceed to recover duties in the manner indicated in proviso to Section 11A of the Act. In Densons Pultretaknik v. Collector of Central Excise [2003 (11) SCC 390], Apex Court held that mere classification under a different sub-heading by the manufacturer cannot be said to be willful mis-statement or "suppression of facts". This view was also reiterated in Collector of Central Excise, Baroda v. LMP Precision Engg. Co. Ltd. [2004 (9) SCC 703]. 19. In the case of Continental Foundation Jt. Venture V. Commr. of C. Ex. Chandigarh - I - 2007 (216) ELT 177 (SC), Hon'ble Supreme court held that section 11A of the Act pos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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