Order date – 14 November 2022 

Facts –

• The Appellants, Marwadi Shares & Finance Ltd and Ketan Marwadi, had taken a security deposit from its customers towards operating of the trading account of shares. 
• The revenue had demanded service tax on security deposit taken by the appellant on trading shares.
• Aggrieved appellant had filed an appeal.

Issue –

• Whether the appellant is liable to pay Service tax on the deposit taken by the appellant from their customers as security deposit against towards trading of shares which is subsequently refunded without utilizing the same?

Order –

• The Tribunal has observed that the revenue has issued a demand of service tax on deposit made by the appellant from their customers towards operating of the trading account of shares.
• The Tribunal relied on the decision of the appellant's own case for a different period in which it is held that the appellant has collected interest free deposit from the demat account holders under the Scheme and in lieu of the same Appellant has not collected AMC charges.
• However, the said “Interest Free Deposit” did not represent value of any taxable service. The said deposit amount was kept with the Appellant as security deposit to adjust the amount in case of any default in making payment by the client. The said deposit amount also refundable to client.
• Further, Section 67 provides that taxable value is the consideration whether in monetary or monetary form. Therefore, if any benefit accrues to either party which is not in the nature of consideration agreed upon by the parties, the same is not liable to be added to the value of service in terms of Section 67.
• Hence, appeal is allowed.