M/s Alankit Assignments Limited Vs CST (CESTAT New Delhi)
VPN was not made by the appellant by way of a support service for the sub-brokers. Evidently, there is no service provider – service receiver relationship between the appellant and the sub-brokers. A part of the cost involved in the VPN has been recovered from sub-brokers as their share of the expenditure. It appears to us that this is a cost-sharing arrangement and not in the form of a service provider-service receiver relationship. Consequently, we are of the view that there is no justification for levy of Service tax under the category of ‘Business Support Services”. Further, after going through the relevant definition appearing in Section 65(104c) of the Finance Act, 1994 we find that the activity is not covered by any of the services listed therein. Consequently, we set aside the demand for Service Tax under this category.
Cenvat Credit on VPN for connecting the sub-brokers cannot be denied
As discussed earlier, the appellant set up a VPN for connecting the sub-brokers with itself and also for maintaining the connection with the Stock Exchanges. The Service Tax paid on the VPN rent was availed as cenvat credit on input service. The Department sought to deny such cenvat credit by taking the view that the service is not directly in relation to the output service i.e. Stock Broking Service. We find considerable force in the stand taken by the appellant. The trading of security in the stock exchange is being carried out only through electronic means by establishing on-line connection to the stock exchange. Since VPN has been used for such purpose, the cenvat credit on the Service Tax paid of the service cannot be denied. Hence, the demand is set aside.
FULL TEXT OF THE CESTAT JUDGMENT
The present appal is filed against the of Order-in-Original No. DEL-SVTAX-ADJ-COM-48-53-13-14 dated 31.03.2014 passed by the Commissioner of Service Tax (Adj.), New Delhi. The period of dispute is from 01.04.2007 to 31.03.2012.
2. Vide the impugned order, the Commissioner has adjudicated the demand raised in six show cause notices issued by various parties. The total service tax demand upheld vide the impugned order is Rs. 4,05,97,745/- alongwith interest and penalties. The following table indicates the demand of service tax made under the different services.
