Order Date: 07 June 2022

Facts:

• The Appellant, M/s Sriram Insight Share Brokers Ltd, have been depositing Service tax on accrual basis, although as per the rules, Service tax was liable to be paid on receipt basis till 31.03.2011. The appellant had deposited service tax of Rs.5,17,406/- on the brokerage amount of Rs.50,23,360/- pertaining to the invoices raised in 2009-10.
• Since the said brokerage income was not received, the appellant made an adjustment in Financial Year 2010-11, in respect of which the instant demand has been raised. The appellant has received the said brokerage income subsequently in Financial Year 2012-13 and accordingly included the same while arriving at the sustainable value for payment of service tax in 2012-13.
• He also referred to the Chartered Accountant’s certificate and the reconciliation submitted by them in the reply to Show Cause Notice which has been ignored by the adjudicating authority.
• As per the revenue authorities, they accept that the appellant had paid tax on brokerage income, transaction charges, market making incentive BSE and Auction Penalty under Stock broking services. They also produced Chartered Accountant’s certificate in this regard.
• However, they have neither submitted the ledger of Stock broking service for 2012-13 nor the documents of receiving the impugned amount in 2012-13. In absence of the same their defence can’t be considered as foolproof and thus, demanded of 5,17,406/- survives.”

Issue: 

• Can a CA Certificate be rejected without giving proper grounds of its rejections?

Order:

• The Court found that the Appellant had duly submitted a reconciliation statement which shows the brokerage income as per the ledger and the disputed adjusted amount which was added to the said ledger amount to submit that service tax has been deposited in Financial Year 2012-13. The Appellant also submitted a Chartered Accountant’s Certificate to justify the said computation.
• Commissioner has not disputed the content of the Chartered Accountant’s certificate submitted by the Appellant. It is a settled position that the authorities cannot reject the CA certificate without stating the reasons as to why the CA certificate submitted by the Appellant is not acceptable to such authorities. Therefore, the stand taken by the Ld. Commissioner to confirm the impugned demand of service tax is legally not tenable.
• The appeal is thus allowed in the manner stated above with consequential relief as per law.