The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that no service tax on computer to computer linkage charges in absence of express provision while acting as a stock broking company.
The question before the Tribunal is whether the appellant Financial Advisors Limited is liable to pay Service Tax on computer to computer linkage charges, while acting as a Stock Broking Company.
Shri Amal Dave, Counsel appearing on behalf of the appellant at the outset submitted that the very same issue in the appellant’s own case has been decided by this Tribunal in their favour vide final order No. A/12224/2022 dated 21.12.2022. Therefore, the issue is no longer res- integra. Shri, P Ganesan, Superintendent(AR) appearing on behalf of the revenue reiterated the finding of the impugned order.
The demand was confirmed on the appellant who is acting as a stock Broking Company on the charges collected against computer to computer linkage service. It was viewed by the department that the brokerage or commission service provided by stock broker shall be liable to service tax. That being consideration for taxable service provided, become assessable value of such service.
The Counsel contended that tax is compulsory exaction, no subject shall be made liable without authority of law. To the extent authority is vested, only to that extent tax can be imposed. Commission or brokerage charged by stock broker are only liable to tax by express provision of law. Any other exercise of authority beyond that shall make that fatal.
In the case of Canara Bank and Union Bank of India cases has held that the sale of RBI bonds would amount to statutory/sovereign function and cannot be subjected to any tax liability. In light of the decision in the appellant’s own case, the issue in the present case is no longer res-integra. Hence, no further discussion is warranted to decide this appeal.
A two-member bench comprising Mr Ramesh Nair, Member (Judicial) and Mr C L Mahar Member (Technical) held that “the demand in the present case is not sustainable. Hence impugned order is set aside. Appeals are allowed.”
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