Service Tax not leviable on Charges collected on behalf of Stock Exchange: CESTAT [Read Order]

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) observed that service tax is not leviable on charges collected on behalf of stock exchange.
The appellant being the stock broker collected DEMAT and depository charges and the same is paid to Vadodara Stock Exchange Clearing House which is registered as depository participant. The appellant during the relevant time were not having the necessary statutory permission to act as a depository participant. As regard the transaction charges/ administrative charges and VSAP/ TWS ( Computer to Computer Linkage ) the same are collected on behalf of the respective stock exchanges namely BSE/NSE and the same are paid to them.
Vivek Bapat, Counsel who appeared on behalf of the Appellant submitted that all the charges collected by the appellant are not their service charge but the statutory charges and the same are deposited to Vadodara Stock Exchange Clearing House and Bombay Stock Exchange and National Stock Exchange, therefore, the same do not attract service tax under any head.
The further submitted that the Supreme Court in the case of Intercontinental Consultants and Technocrats Pvt. Ltd vs. UOI while upholding the order of the Delhi High Court held that service tax is chargeable only on the charges for providing services. In the present case since reimbursement collected from the sub – broker on behalf of stock exchanges, the same cannot be part of the value of services, therefore, the demand is not sustainable.
A Two-Member Bench of Ramesh Nair, Judicial Member and Raju, Technical Member observed that “It is settled that all the charges which are involved in the present case have been held as not the service charges of the broking firm and hence not liable to service tax and this consistent view has been taken in the other judgments cited by the appellant. Therefore, in the present case also all the charges which were collected on behalf of the stock exchange are not liable to Service Tax.”

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