By Puloma Dalal, Jayesh Gogri, Chartered Accountants
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Whether service tax is applicable to a Stock Broker on receipts such as turnover charges, stamp duty, BSE charges, SEBI fees and DEMAT charges paid to various authorities?
Facts:
Appellant filed appeal against the order levying service tax along with interest and penalty on the receipts of stamp duty, BSE charges and SEBI fees, which were deposited by the appellant with the authority under different statutes. Limitation ground was also pleaded.
Held:
Clause (a) of explanation to section 67 of Finance Act,1994 stipulates that aggregate of commission or brokerage charged by broker on sale or purchase of securities including commission or brokerage paid by the stock broker to any sub broker is liable to service tax. It cannot be expanded to levy tax on a receipt by implication or inference. It is an unambiguous charging section, which is to be construed strictly. No receipt other than commission or brokerage made by a stock broker, that being the consideration for taxable service, is intended to be brought to ambit of assessable value of service provided by stock broker, charge on such other items is arbitrary taxation and cannot be taxed in disguise – section 65(101) and 65(105) (a). Scope of section 67 cannot be expanded to have artificial measure for levy bringing a receipt by implication and not in accordance with the charging provision. It is intrinsic value of service provided which is taxed without any hypothetical rule of computation of value of taxable service. Bonafide belief was clear as there was no levy on receipts other than brokerage received by stock broker from investors. In such a case, suppression cannot be charged. Hence, extended period was not invokable. No subject can be made liable without authority of law and based on presumption or assumption. Provisions cannot be imported in statute so as to supply any deficiency. Appeal was thus allowed.
