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TMI Blog2013 (2) TMI 328X X X X Extracts X X X X X X X X Extracts X X X X ..... change. Further it is not the case where stock broker had collected any excess amount from his clients and had not paid such amount to the stock exchange. The Pure Agent issue is not under dispute. Therefore, appellant are coming under the category of “Pure Agents” – Therefore turnover charges or transaction charges are not includible in the taxable value and the appellant is not liable to pay Service tax on the same during the disputed period – In favour of assessee. Cenvat credit towards employees insurance, food charges – Whether the appellant is eligible for the Cenvat credit availed on Service tax paid towards employees insurance, food charges, subscription/books/periodicals and travelling expenses – Appellant had availed credit on the Service tax paid towards employees insurance, food charges and travelling expenses which are not used in providing their output service It has been decided in the case of Ultratech Cement Ltd.[ 2010 (10) TMI 13 - BOMBAY HIGH COURT ] that the assessee is entitled for input service credit of the services, which are availed in course of their business and manufacturing activity. Thus, the services which were availed during the course of thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich results in the system getting net worked and the transactions of buying and selling getting effected. Further on verification of their Cenvat documents for the years 2004-05 to December 2008, it appeared that the appellant had availed ineligible credit on the Service tax paid towards employees insurance, food charges and travelling expenses which are not used in providing their output service. This ineligible credit was taken during April 2004 to Dec 2008 and it works out to Rs. 11,36,704/-. It was also noticed that the appellant were availing credit on the debit notes raised by an associate company M/s. Cholamandalam DBS Finance Ltd., Dare house, Chennai-1 who share the common expenses such as car parking expenses, water and electricity expenses, coffee and stationery expenses etc., with the appellant. This is an ineligible credit availed by the appellant during the period from Oct 2007 to March 2008 as M/s. Cholamandalam DBS Finance Ltd., Dare house, Chennai-1 is neither service provider nor input service distributor. The ineligible Cenvat credit availed by the appellant works out to Rs. 7,97,605/- 2.2 Hence a Show Cause Notice proposing to demand an amount of Rs. 2,34,617/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant does not hold or have any intention to hold the services of stock exchanges. (iii) that the appellant submitted that there is no relation between the Computer to Computer Link Connectivity and the transaction charges. It is nowhere stated in the circular dated 11-12-2000 that the transaction charges are paid for the connectivity purpose. (iv) that the appellant submitted regarding insurance coverage and food charges that though these facilities have been given to the employees as a welfare measure, the services of the employees are utilized solely and exclusively for rendering the output services to the clients. (v) that the appellant submitted that the movement of securities price is predominantly depending on the market news, Govt. policy etc. They have an exclusive research team to render advices to the clients on their investments. Therefore they need to keep themselves updated on the daily happenings for which they incur the expenditure on subscription of periodicals which is directly linked to the output services rendered by the company. (vi) that the appellant submitted that the travelling expenses are incurred to meet the client to render the nece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icals and travelling expenses, (iii) the appellant is entitled for the credit taken on debit notes issued by their associate company. 5.1 Let me discuss issue wise : (i) Whether the amount collected as transaction charges by the appellant is includible in the taxable value or in other words whether the appellant is liable to pay Service tax on the transaction charges or turnover charges collected : The appellant s main contention is that the stock exchanges had imposed the obligation of collecting these transaction charges on the stock brokers. Therefore, every stock broker entity has to collect the specified percentage as transaction charges on their traded value from their clients and pass on the same to respective stock exchanges as an agent; that there is no relation between the Computer to Computer Link Connectivity and the transaction charges and hence they are not liable to pay Service tax on the same. 5.2 The Department had alleged that this turnover charges collected by the appellant are paid to the exchanges for getting the connectivity without which the business of trading cannot be conducted. They had mainly relied on Section 67 of the Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om payment of Service tax on that amount. Regarding the allegation, that the turnover charges paid to the exchanges were for getting the connectivity, I find that the same is not substantiated by the lower authority. Hence I am not inclined to accept the same. In view of the above, I hold that the turnover charges or transaction charges are not includible in the taxable value and the appellant is not liable to pay Service tax on the same during the disputed period. (ii) Whether the appellant is eligible for the Cenvat credit availed on Service tax paid towards employees insurance, food charges, subscription/books/periodicals and travelling expenses : 5.4 Before discussing the eligibility of credit availed on the various services utilized by the appellant, it is pertinent to mention at this juncture that the issue has been already settled by the Bombay High Court in the case of Ultratech Cement Ltd., reported in 2010 TIOL 745 HC-MUM. = 2010 (20) S.T.R. 577 (Bom.) = 2010 (260) E.L.T. 369 (Bom.). In the case of Ultratech Cement Ltd. the Hon ble High Court has held that the assessee is entitled for input service credit of the services, which are availed in course of their bu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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