The Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that no service tax on NSDL & CSDL charges is collected by brokers paid to depositories under Depositories Act,1996.
Saurin Investments Private Limited, the appellant is a stock broking firm, that challenged the inclusion of NSDL & CSDL charges in the assessable value for service tax. The dispute relates to the includability of NSDL/CSDL charges paid by the appellant to the depositories which were recovered from their clients. The appellant had not included the said amounts in the assessable value for payment of service tax.
It was noticed that in the appellant’s case, the tribunal has allowed the exclusion of the said charges from the assessable value relying on the board circular B11/1100-TRU dated 9.7.2001.
It was evident that the Provision of Section 67 provides the basis to determine the value of taxable service. No ambiguity persists in Section 67 of the Act. No receipt other than commission or brokerage made by a stockbroker is intended to be brought to the ambit of the assessable value of service provided by a stockbroker.
The character of commission or brokerage is remuneration for the service of stock broking provided by a stock broker to investors. Therefore, aforesaid charges realized by appellants were not being of commission or brokerage are not taxable and shall not form part of the gross value of taxable service.
A Coram comprising of Ms Sulekha Beevi C.S., Member (Judicial) observed that the allegation of the department that the demat charges collected by the brokers are banking and financial service, hence taxable, also devoid of merit in as much such charges are collected by the Appellant, and paid to the depository participants viz. CDSL/NSDL are authorized to levy such charges under the Depositories Act, 1996. While allowing the appeal, the impugned orders were set aside by the Tribunal. Shri M.N. Bharathi Advocate appeared for the Appellant and Smt. Anandalakshmi Ganeshram, Superintendent appeared for the Respondent.
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