9911796707
TMI Blog2013 (7) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... received is not a consideration for the services rendered - Service tax is not a tax on income or profits but a tax on provision of service - Whatever amount is charged for such provision service tax is payable irrespective of whether any profit is made by the service provider in the said transaction. Market Research Services – assesse contended that the service provided does not come under the category of ‘Market Research Services' as they do not pertain to any product, service or utility - Held that:- Research on equity is a product research - the term Market Research Agency was defined in section 65(69) We are of the view the equity research undertaken by the appellant falls within the scope of this definition and accordingly - appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application are directed against Order-in-appeal No. MI/AV/64/2011 dated 31-01-2011 passed by the Commissioner of Central Excise (Appeals), Mumbai. 2. The appellant, M/s Kotak Securities Ltd., Mumbai, is a joint venture company between M/s Kotak Mahindra Bank Ltd. and M/s Goldman Sachs Ltd. They have a research department which conducts equity research and prepare research reports on the financials of the companies listed on the bourses and the stock market performance of equity shares of such companies. In the Profit and Loss account for the years 99-2000 to 2002-03, they had shown "Fee income/Research Fees received amounting to Rs. 6,51,79,558/- on which no service tax had been paid by the appellant company. The department was of the vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the services are provided by the appellant and KMCC jointly to clients on a cost/revenue sharing basis. Sharing of cost/revenue can not be construed as consideration for service. Reliance is placed on the circular No. 109/3/2009-ST dated 23-2-09 issued by the CBEC in the context of distribution of cine films. The amounts sought to be shared are in the nature of maintenance, electricity, telephone, stationery, postage, staff costs, etc. which are clearly in the nature of expenses incurred for the equity research department/facility. c) There is no service provider-client relationship between the appellant and KMCC. KMCC is an affiliate company of the appellant under common shareholding of the Kotak Mahindra Group. d) Reimbursement of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransactions. The agreement also provides for sharing of income towards Public Issue, Marketing Activities and Private placement of securities between the appellant and KMCC equally and sharing the cost of Research Department in the ration of 1:2 between KMCC and the appellant. Sharing of expenses on common usage of facilities is as per the details given in the annexure to the agreement. From the above agreement it is evident that the appellant has been providing research support to KMCC and the consideration for the said service is by way of sharing of costs. 5.2 Allegation in the show cause notice is that the appellant has shown an income during the impugned period (October 2000 to March, 2003) in the P/L account Rs.6,51,79,558/- under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot a consideration for the services rendered. Service tax is not a tax on income or profits but a tax on provision of service. Whatever amount is charged for such provision, service tax is payable, irrespective of whether any profit is made by the service provider in the said transaction. 5.4 Another argument has been raised that the service provided does not come under the category of 'Market Research Services' as they do not pertain to any product, service or utility. It is not in dispute that the appellant conducted equity research and prepared reports on the financials of the companies listed in the stock exchanges and the stock market performance of equity shares of such companies. Equities definitely come under the categories of prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the question of time bar does not apply in the facts of the present case. 5.6 We also note that subsequently, the appellant has started paying service tax on the research activities undertaken by them. Invoices dated 27-3-2009 and 31-1-2013 produced before us, evidence this fact. 5.7 The appellant has not pleaded any financial hardship. Therefore, in the absence of a prima facie in favour of the appellant, the balance of convenience lies in favour of Revenue and, therefore, as held by the hon'ble High Court of Andhra Pradesh in the case of SQL Star International Ltd. - 2012 (25) STR 113 (AP), pre-deposit of dues adjudged can be ordered. 6. In view of the foregoing, we are of the prima facie view that the appellant has not made out any c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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