V S E Stock Services Ltd Vs C.C.E. & S.T.-Vadodara-ii (CESTAT Ahmedabad)
CESTAT Ahmedabad held that demat/depository charges, transaction/ administrative charges and VSAP/TWS charges collected by sub brokers on behalf of the stock exchange are not liable to Service Tax.
Facts- 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.
Notably, the issue involved in the present case is that whether demat/ depository charges collected from sub brokers is liable to service tax under banking and other financial services; transaction/ administrative charges collected from sub-brokers is liable to service tax under the head of stock broker service and VSAP/TWS charges collected from sub broker is liable to service tax under the head of stock broker service.
Conclusion- In the case of Saurin Investments Pvt Ltd this Tribunal has held that NSDL/CDSL charges collected by the stock broking firm cannot be liable for service tax. In the present case the charges of stock exchange are similar charges therefore following the ratio of Saurin Investments case, the same is not liable for service tax.
In the case of Indses Securities and Finance Pvt Ltd this Tribunal held that NSE/BSE transaction charges, depository/ Demat charges are not liable to service tax in the hands of the stock broker.
Held 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.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The issue involved in the present case is that whether
(i) Demat/ Depository charges collected from sub brokers whether the same is liable to service tax under banking and other financial services.
(ii) Transaction/ administrative charges collected from sub-brokers is liable to service tax under the head of stock broker service.
(iii) VSAP/TWS charges collected from sub broker is liable to service tax under the head of stock broker service.
1.2 The brief facts of the case are that 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.
1.3 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.
2. Shri Vivek Bapat, Learned Counsel appearing on behalf of the Appellant at the outset submits 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. He submits that all the issues have been settled in the various judgments, he relied upon the following judgments:-
