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Service Tax Case Law - A stock broker along-with brokerage charges .

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Service Tax – Valuation - Whether the transaction charges received by a stock broker alongwith brokerage charges shall be included in the taxable value.

HELD - In terms of Section 67 of the Act, any amount which is collected not for providing ‘such’ taxable service, the same cannot form part of that valuation. Irrespective Section 67 has undergone amendment w.e.f. 01.05.2006 but, the interpretation of Section 67 is that the value of taxable service shall be the gross amount charged by the service provider ‘for such service’ and the valuation of tax service cannot be nothing more or less then the  consideration paid as quid pro quo for rendering such a service - it is only in case the transaction of giving stock broker service is on principal to principal basis that the service is not taxable, in rest of the cases the service is taxable.

It was mandate for the authorities below to verify the records to distinguish the cases where the appellant has provided services as pure agent on principal to principal basis from those where the appellant has provided stock brokerage services on its own behalf. Without this distinction, the correct assessment of the liability of appellant as stock broker cannot be ascertained – the matter is remanded back to the adjudicating authority to decide the issue in terms of the said verification - Appeals stands allowed by way of remand.

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Guest Wednesday, 18 September 2019

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