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CESTAT: NSE / BSE Transaction Charges and SEBI Turnover Fees is not liable to Service Tax under Head of ‘Stock Broker Service’

The Ahmedabad Bench of Customs Excise and Service Tax Appellate Tribunal (CESTAT) ruled that NSE/BSE transaction charges and SEBI turnover fees are not liable to service tax under the head of “stockbroker service”.

Facts of the case:-

The appellant, Monarch Research & Brokerage P Ltd is engaged in providing Service under the category of Stock Broker as defined under Section 69 of the Finance Act, 1994. It was observed that the appellants had not paid Service Tax on a certain amount received on account of their services, such as NSE/BSE transaction charges and SEBI turnover fees which forms an integral part of their services viz. Stock Broker Service. The case of the department is that the appellants were availing wrong exemption on the certain amount received by them during providing their taxable services, such as NSE/BSE transaction charges and SEBI turnover fees as the non-taxable amounts.

However, it was observed that they were charging and collecting such an amount in their billing/contract notes from their clients/ customers. Accordingly, the Services Tax remands of such NSE/BSE charges were proposed the same confirmed by the adjudicating authority.

Interpretation of law:-

The Commissioner (Appeals) in the appeal filed by the appellant also upheld the demand confirmed by the Original Authority. The issue involved in this case is whether NSE/BSE transaction charges and SEBI turnover fees paid by the stockbrokers to the concerned agencies and recovered from their client are liable to service tax under the category of stockbroker service.

Conclusion:-

The Coram of Judicial Member, Ramesh Nair, and Technical Member, Raju held that NSE/BSE transaction charges and SEBI turnover fees paid by the stockbrokers to the concerned agencies and recovered from their client is not liable to service tax under the category of stockbroker service.

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