Service Tax
TRT-2025-
Cestat Chandigarh
Date:-13-10-23
In:-
Issue Favourable to Tax Payer ?:-
Order Date – 13 October 2023
Parties: M/s H.B. Securities Ltd. vs. The Commissioner of Central Excise, Delhi-IV
Facts –
- The Appellant, M/s H.B. Securities Ltd., engaged in trading of securities as Stock Brokers, were alleged to have not paid service tax on transaction charges recovered from their clients along with brokerage.
- Show-cause notices were issued to the appellants seeking to recover service tax for two different periods, along with interest and penalty.
- The Commissioner (Appeals) upheld the duty demanded and the penalty imposed under Section 76, while setting aside the penalty imposed under Section 78.
Issue –
- Whether transaction charges collected by the appellants from their clients are subject to service tax?
Order –
- The Tribunal observed that the transaction charges are payable by the Stock Brokers in terms of the Regulations issued by SEBI and these are not any fee or statutory levy that is payable by the customers of the Stock Brokers. In effect, the Stock Broker/ Appellants are recovering the fee or charges payable by them to SEBI for the conduct of business and are paying the same to SEBI. Therefore, these charges recovered from the customers are in the nature of consideration towards the taxable service rendered by the appellant as far as the customers are concerned.
- Further the Tribunal has already gone into the issue of the includability of transaction charges in the service tax in the case of Sriram Insight Share Brokers Ltd.- 2019 (26) GSTL 231 (Tri. Kolkata) wherein it was held that “the legal responsibility of the payment of transaction charges was of the trading members (in this case apparently the appellant) and as levy of transaction charges from the concerned stock exchange is on the appellant and since this liability have been passed on by him on their clients, we are of the view that same need to be included in the taxable value as per the provision of Section 67 of the Finance Act, 1994.”
- Therefore, the impugned orders do not require intervention. The appeals are dismissed.
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