Service Tax Not Payable On Demat Or Depository Charges: CESTAT
Mariya Paliwala
4 Jan 2024 3:45 PM GMT
The Ahmedabad Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that service tax is not payable on demat or depository charges collected from sub-brokers.The bench of Ramesh Nair (Judicial Member) and Raju (Technical Member) has observed that demat or depository charges are collected by the sub-brokers and paid to the depository participants who are authorised to...
The Ahmedabad Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that service tax is not payable on demat or depository charges collected from sub-brokers.
The bench of Ramesh Nair (Judicial Member) and Raju (Technical Member) has observed that demat or depository charges are collected by the sub-brokers and paid to the depository participants who are authorised to levy such charges under the Depositories Act, 1996.
The appellant/assessee, being the stock broker, collected DEMAT and depository charges, which were paid to Vadodara Stock Exchange Clearing House, which is registered as a depository participant. The appellant, during the relevant time, did not have the necessary statutory permission to act as a depository participant.
The department demanded the service tax on all the charges namely Demat/ Depository charges, Transaction/ administrative charges and VSAP/TWS charges collected from the broker.
The assessee contended that all the charges collected by the appellant are not their service charge but the statutory charges and the same are deposited with Vadodara Stock Exchange Clearing House, Bombay Stock Exchange, and National Stock Exchange; therefore, the same does not attract service tax under any head.
The tribunal held that all the charges on which service tax was demanded by the department were statutory charges, which were collected from the sub-brokers, but the same was deposited with the stock exchange, i.e., Vadodara Stock Exchange Clearing House, Bombay Stock Exchange, and National Stock Exchange; therefore, these charges were not collected as service charges by the appellant but only as reimbursements, which were paid to the stock exchange. Therefore, these charges cannot be considered the service charge for any services provided by the appellant to their sub-broker.
Counsel For Appellant: Vivek Bapat
Counsel For Respondent: Ajay Kumar Samota
Case Title: V S E Stock Services Ltd. Versus C.C.E. & S.T.-Vadodara-ii
Case No.: Service Tax Appeal No. 12130/2014-Db
