Stock Exchange Fee subject to Service Tax under RCM: CESTAT [Read Order]

The CESTAT, Ahmedabad bench has held that the stock exchange fee paid for availing stock exchange service shall be subject to service tax under Reverse Charge Mechanism (RCM) in terms of Section 66A read with Rule 2(1)(d)(iv) of Service Tax Rules, 1994.

The appellant are engaged in the manufacturing of Bulk Drugs falling under the Chapter 29 of the Central Excise tariff Act, 1985 and registered with the department for payment of service tax under the category of GTA, BAS, Online Data Information Service etc. During thecourse of audit, it was observed by the audit officers that appellant is receiving the taxable services from outside India including stock exchange services and incurred the expenditure in foreign currency. Revenue initiated proceedings against them to demand and recover service tax not paid under reverse charge mechanism during the period 2006-07 to 2008-09. Proceedings initiated against the appellant culminated in the impugned order resulting in confirmation of Service tax liability of Rs. 45,42,521/-. A penalty under Section 76,77 and 78 of the Finance Act, 1944 was also imposed.

The appellants challenged the order before the Tribunal.

The bench comprising Member (Judicial), Mr. Ramesh Nair and Member (Technical), Mr. P.Anjani Kumar observed that no documentary evidence was produced by the appellantto show that stock exchange fees is a statutory levy and the appellant have paid as reimbursement.

“It appears that the Stock Exchange has charged fees to the appellant against the stock exchange service, therefore, in our considered view in the facts of this activity, the stock exchange- Singapore has provided the service to the appellant against stock exchange service therefore, this clearly covers under taxable service and appellant is liable to pay tax under Reverse Charge Mechanism in termsof Section 66A read with Rule 2(1)(d)(iv) of Service Tax Rules, 1994. Accordingly, demand of service tax on stock exchange service is upheld,” the Tribunal said.

 To Read the full text of the Order CLICK HERE

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