1. This is an application challenging the order of Commissioner (Appeals) made on 14.3.07. In the impugned order the Commissioner has observed as follows: 5. I have carefully gone through the case records, submissions made by the appellants in appeal and at the time of personal hearing. I find that, the demand has been confirmed on the ground that "the service provider has acted as share broker while making transaction with their clients and has charged a certain amount for providing services the same is liable to Service Tax." On the contrary, the Appellant has contended that they were sub broker, they were not stock broker. In this regard, I find that, they have provided services of stock broker while making transactions with their clients, they acted as share broker and has charged brokerage for providing such services, therefore, the Adjudicating Authority has rightly hold that such amount is liable to be service tax.
Accordingly, I uphold the Impugned Order confirming the demand of Appellants.
6. As regard Appellants contention that Board's Circular No. 80/10/2004 dated 10.9.2004, provides that service provided by broker, sub broker to investors in connection with sale and purchase of securities listed on recognized stock exchange would be subjected to Service Tax. In this regard, I find that Appellant has not provided any evidence to prove that, as sub broker, they have not dealt with the securities listed recognized stock exchange.
Therefore, I find that, as they were dealing in securities listed in recognized stock exchanges, the demand confirmed vide the Impugned Orders are also sustainable in terms of the circular referred by the Appellant.
7. Since the demand is confirmed and the Adjudicating Authority has brought on record that the Appellant has violated provisions of Section 68, 70, therefore, I find that the Adjudicating Authority has rightly imposed penalty under Section 76, 77 and 78 as mentioned in above table. Accordingly, I uphold the penalty imposed by the Adjudicating Authority.
2. The learned Counsel for the appellant states that in reply to show cause notice they had clearly admitted that they are sub-brokers to M/s. JSEL Securities Ltd., Jaipur and it has not questioned the status of their being sub-broker. In this context, he draws our attention to the amendment to the Finance Act, 2004 with effect from 10.9.04 by which the services of sub-broker were brought into the net of service tax by including them in the definition for whatever services rendered by them by way of collecting the brokerage was not rendered by them as stock broker.
3. The learned DR states that though he was a sub-broker, he was engaged in the activity of a stock broker which attracts service tax and the lower authorities have correctly demanded the dues from them.
4. Having heard both the sides and perused the records, we find that vide Section 65(105) of the Finance Act, 1994 (as amended) taxable service means any service provided to a exchequer of a stock broker in connection with the sale or produce of security listed on a recognized stock exchange. Further, Section 65(101) defines 'stock broker' to mean a stock broker who has either made an application for registration or is registered as a stock broker in accordance with the Rules and Regulations made under the Securities and Exchange Board of India Act, 1992 (15 of 1992). Admittedly, during the relevant period, (14.5.03 to 31.12.03), the applicant was admittedly a sub-broker and who was not registered as a stock broker in accordance with the SEBI regulations.
5. In view of this, prima facie, it appears to us that the appellant has made out a fit case for waiver of duty and penalty demanded under the impugned order. We, therefore, direct that there shall be no pre-deposit requirement for the purpose of hearing the appeal. The appeal shall come up for hearing in its due course.