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Landmark Service Tax Judgment - Stock Broker Services

Taxable Services - Stock Broker Services

Case Laws Related

  • STO 2013 CESTAT 1195
  • Stock Broker Service: Since services provided by sub-brokers also taxable services in respect of which relevant service tax is liable to be remitted by such sub brokers, in respect of the very same service, no service tax is again remittable by the principal stock broker: Frivolous appeal filed by Revenue: Cost of Rs.1,000/- to be recovered from Revenue for such appeal. 

  • STO 2012 CESTAT 322
  • Stock Brokers: Valuation: Transaction charges, etc in dispute: Only brokerage or Commission received by broker to be taxed: 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.

  • STO 2010 CESTAT 505
  • Service Tax: Storage and Warehousing" services defined under clause (102) of Section 65: Taxable event: Demand: In so far as storage of agricultural produce is concerned, Service Tax is not leviable on any demurrage charges collected by the warehousing company. The definition of "storage and warehousing" under Clause (102) of Section 65 of the Finance Act, 1994 reads thus:-

    "storage and warehousing" includes storage and warehousing services for goods including liquids and gases but does not include any service provided for storage of agricultural produce or any service provided by a cold storage..

    A clarificatory Circular issued by the Board (No. B11/1/2002-ST dated 1.8.2002) made the legal position very clear. The second remand order passed by the learned Commissioner (Appeals) is under challenge. The Commissioner (Appeals) has no power of remand as held by the Hon'ble Supreme Court in Mil India Ltd. Vs. Commissioner [CEO 2007 SC 25]. (Para 4). Appeal allowed by way of remand to the lower appellate authority,(Paqra 5).

  • STO 2010 CESTAT 385
  • Service Tax: Stock Broker Services: NSE and BSE transaction charges paid to SEBI: Pre-deposit: Such charges are not liable to service tax prior to May 2008, when the same were specifically included in the services held liable to service tax. Inasmuch as the Commissioner (Appeals) has dismissed the appeal for non-compliance with the stay order, the impugned order is set aside and remand the matter to Commissioner (Appeals) for decision on merit, without insisting upon any pre-deposit.

  • STO 2010 CESTAT 278
  • Service Tax: Stock broker service: Section 80: Waiver of Penalty: Reasonable cause: The observations of the Commissioner (Appeals) which has been reproduced clearly spells out the circumstances in which the Commissioner (Appeals) has exercised his discretion under Section 80 of the Finance Act, 1994 and the Revenue has failed to establish that the Commissioner (Appeal) has exercised his power arbitrarily. Appeal filed by the Revenue is rejected. (para 6)

  • STO 2010 CESTAT 291
  • Service Tax: Stockbrokers Service: NSE transaction charges made to be liable to service tax from May 2008:  Pre-deposit: Commissioner (Appeals) has not decided the issue on merits but has dismissed the appeal for non compliance with the stay order passed by him. The impugned order set aside and remand the matter to Commissioner (Appeals) for decision on merits, without insisting on pre-deposit. (para 2)

  • STO 2010 CESTAT 401
  • Service Tax: Stock Broker Services: Remand: If the main stock broker is subjected to levy of service tax on the self same taxable service provided by sub-broker to the stock broker and the sub-broker has paid service tax on such service, the stock broker shall be entitled to the credit of service tax. In all the three references, it would be proper to send the matter back to the original authority without being sent to the concerned Benches, to verify as to whether the stock broker have paid service tax on behalf of the sub-brokers and if so, reduce the demand on sub-broker to that extent and pass fresh orders, granting fair opportunity of hearing to the sub-brokers. All the appeals are allowed by way of remand. (para 9,10)

  • STO 2009 CESTAT 1646
  • Service Tax: SEBI registered Sub-broker and they do not come under the purview of Service Tax: Refund claim: Unjust enrichment: The appellants have furnished a certificate issued by their Stock broker M/s. Balaji Equities Limited, Hyderabad, to the extent that service tax on the services rendered by his sub-broker are being remitted by him regularly. As regards the non-passing of the incidence of service tax was verified by lower authorities. The refund claim was scrutinized and verified by the lower authorities and the appellants had produced all the evidences. On completing the verification, the adjudicating authority has passed the refund claim. There is no contrary evidence produced by the revenue to indicate that the findings of the adjudicating authority and the verifications are incorrect. In the absence of any contrary evidence, the impugned order is incorrect and is not sustainable.(Para 7).

    Appeal allowed.

  • STO 2009 CESTAT 1081
  • Service Tax: Stock-broker service: Scope and liability: The appellants created additional facility to the members of the Madras Stock Exchange(MSE) to trade with the Mumbai Stock Exchange as per Memorandum of Association and Articles of the appellants they act as a market intermediary for facilitating the transactions of the members of the MSE and with other stock exchanges where the appellants are members. They provide terminals for the members of the MSE to trade with Mumbai Stock Exchange and other Stock Exchanges. Only the Members of the MSE are eligible to become members of the appellants and the said members of the MSE continued to function independently as stock-brokers. The members render service as stock-brokers and receive commission or brokerage from the investors directly and pay fees to the appellants for the facilities availed. The appellants cannot be considered as stock-broker as they are not involved in the sale and purchase of securities and as per the Articles of Association, the appellants shall not undertake any dealings in securities on its own account. (Para 2).

    Appeal allowed.

  • STO 2008 CESTAT 293
  • Sub-broker: Even though there is no privity of contract between sub-broker and the investor, and the sub-broker is not directly engaged in the business of sale or purchase of securities on behalf of the investor, if he is a registered sub-broker, he would be liable to pay Service Tax on the amount received by him as commission or otherwise from the stock-broker under the agreement with him.

  • STO 2007 CESTAT 1231
  • Liability of sub-brokers : Sub-brokers of stock brokers liable to pay service tax from 10.9.2004. Demand for the prior period set aside.

  • STO 2007 CESTAT 409
  • Service Tax: stock broker: Scope: Prior to the amendment in the definition of 'sub-broker', which was made on 10-9-2004, the portion of taxable service provided by 'stock broker' was exempted under the Notification No. 25/2004-S.T., dated 10-9-2004. However, thereafter, since sub-broker was included in the definition of 'stock broker', the exemption stood withdrawn. However, the liability, which was earlier exempted would, prima facie, be that of 'stock broker' in the capacity as a stock broker in respect of the services provided by the said stock broker. The appellant has, therefore, made out a prima facie case in their favor (Para 1).

    Pre-deposit waived, stay allowed.

  • STO 2007 CESTAT 6
  • Stock Broker Service: The applicant was admittedly a sub-broker and best swiss replica watches who was not registered as a stock broker in accordance with the SEBI regulations; taxable service means any service provided to a exchequer of a stock broker in connection with the sale or produce of security listed on a recognized stock exchange. Appellant being sub-broker not liable to tax Prima facie case made out in favour of appellant.  Predeposit waived; stay granted.

  • STO 2007 CESTAT 149
  • Service Tax: Stock Broker: Penalty u/s 78: Time bar: The respondent had collected the amount of Service Tax charged by them from their customers but not deposited with the authorities. Commissioner (Appeals) has not clearly spelt out in his order as to under what circumstances or reasonable cause was shown by the respondents, in order to invoke the provisions of Section 80 and set aside the penalties under Section 78. The Commissioner (Appeals) has also not considered the submissions of the respondents regarding arguments on limitation. The entire impugned order is also silent on the submissions made by the respondent as regards their inability to pay the Service Tax collected, due to the Court cases etc., which the respondents was fighting out with the other Government authorities. Though the time bar issue is being taken for the first time, it is well settled law that the limitation can be raised at any time, even at the appellate level. Since the impugned order has not considered the submissions regarding time bar, the impugned order needs to be set aside on this point and also on the fact that the Ld. Commissioner (Appeals) has not given any reasoning to invoke the provisions of Section 80 while setting aside the penalty under Section 78.(Para 6).

    Appeal allowed by way of remand.

  • STO 2007 CESTAT 5
  • Double Taxation: Simply holding a registration cannot make a person liable to discharge a tax which otherwise does not become payable ca replica paneari online store. This (in our opinion), can never be the intention of the legislature.  If that could be so, taxes alone would be the only expanding feature on this otherwise shrunken globe. Charging Service Tax from Broker and Sub Broker amounts to Double Taxation.


     

     

  • STO 2007 CESTAT 1
  • STO 2007 CESTAT 1093
  • Stay: “Handling charges” and “Terminal charges” were charged from investors. The said charges were not included in the brokerage charges. In similar issue stay granted by Tribunal to another assessee. Full waiver granted.

  • STO 2007 CESTAT 297
  • Service Tax: Stock Brokers Services: Service tax on handling charges: Taxable value: The amendment has been brought on 10-9-2004 to include handling charges. The Assistant Commissioner has clearly held that it has got prospective effect. However the Commissioner has taken a different view in his order of revision. Prima facie after hearing both sides, opinion is formed that the amendment will have only prospective effect. The appellants have made out a strong case in their favour.(Para 2).

    Stay application allowed.

  • STO 2007 CESTAT 546
  • Stock Broker Service: Sale and purchase of security in the Stock Exchange is handled only by the main broker and the sub-brokers are only taking the interested buyers to the main broker. Therefore, levy will fall only on the main brokers who handled sale and purchase of security in the stock exchange.

  • STO 2007 CESTAT 86
  • Service Tax: Stock Broker services, Services as Registrar and Share Transfer Agent: Scope: The appellants are already covered under the heading Stock Broker Services. For the purpose of bringing them under the category of Business Auxiliary Services, as per the definition, they should promote marketing or sale of goods produced. There is no such sale or marketing for promotion of goods. Therefore, prima facie, the order is correct. There is no merit in the stay application(Para 2).

    Revenue stay application rejected.

  • STO 2007 CESTAT 292
  • Stock Broker Service: Stay: Applicants were separately showing the turn over tax in the contract note issued to the clients as turnover tax and this is to be deposited with the recognized stock exchange where the applicant has registered and is not part of brokerage. Stay granted.

  • STO 2006 CESTAT 343
  • Service Tax: Application for statement of the case to the High Court: The transaction involved between broker to broker would never fall under the definition of Taxable service as provided under Section 65(1) of the Finance Act, 1994 during the relevant period. The Revenue's contention that the brokerage charged by one broker to another broker would also fall under the taxable service is not at all correct as is clear from the said definition of the Taxable service. There is no dispute regarding the amount collected to be the brokerage between two brokers inter se. There arises no question of law. Hence the application filed for referring the question of law to the High Court is devoid of any merits(Para 1,2).

    Application rejected.
     

  • STO 2005 CESTAT 57
  • Stay : Brokerage : Transaction charges : Whether includible in taxable value a debatable issue partial waiver granted.

  • STO 1999 CESTAT 10
  • Service Tax: Stock Brocker service: Taxability: whether brokerage not collected by a stock-broker from any of his clients (although such brokerage was collected from others), is liable to be charged to service tax or not. This issue has been found by the Tribunal in favour of the appellants in the case of Chandra Vadan Desai v. C.C.Ex., Calcutta-I reported in STO 1997 CESTAT 4 (Para 1).

  • STO 1996 CESTAT 1
  • Brokerage: Inclusive of service tax: Where the brokerage collected was shown to be inclusive of service tax and where the fact was indicated in all the relevant documents, there was no justification for calculating the service tax on the brokerage so inclusive of service tax. 

     
     

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