Judgment:
1. This appeal is filed against the Revision Adjudication Order No.38/2006 dated 31.8.2006, passed by the Commissioner of Service Tax, Bangalore.
2. The appellant is registered under the category of 'Stock Broker' for payment of Service Tax. The Revenue proceeded against the appellants for demand of Service Tax. The Adjudicating authority in the Order-in-Original dated 23.12.2004 demanded the Service Tax of Rs. 5,03,517/-. He imposed penalty of Rs. 100/- per day under Section 76 and further penalty Rs. 25,000 under Section 78 of Finance Act, 1994.
The appellants approached the Commissioner (Appeals). The Commissioner (Appeals) upheld the Order-in-Original. The appellants filed stay petition and appeal before the Tribunal. The Tribunal disposed of the stay application in its Stay Order No. 157/2007 dated 08.02.2007. The appeal is due for final hearing. In the meantime, the Commissioner of Service Tax passed the impugned Order-in-Review by reviewing the order of the Original Authority. In the Review Order, the Commissioner enhanced the penalty to Rs. 6,00,000/- from Rs. 25,000/-. The appellants are aggrieved over the impugned order.
3. S/Shri K.S. Ravi Shanker and N. Ananad, learned Advocates appeared for the appellants and Ms. Sudha Kokar, learned SDR for the Revenue.
4. Heard both the sides. We find that "the Order-in-Original confirming duty and imposing penalty of Rs. 25,000/- on the appellants was passed on 23.9.2004. In terms of Section 84(4) of the Finance Act, the Commissioner of Central Excise is precluded from reviewing the order passed by the lower authority in respect of any issue if any appeal against such issue is pending before the Commissioner (Appeals). In the present case after the Order-in-Original was passed, the appellant approached the Commissioner (Appeals) and the Commissioner (Appeals) upheld the Order-in-Original in his order dated 14.2.2005. In other words, on 14.2.2005 the Order-in-Original has merged with the Order-in-Appeal dated 14.2.2005. In such circumstances, there is no Order-in-Original existing for review by the Commissioner of Central Excise. The review Show Cause Notice was issued on 15.5.2006, i.e. long after the original order had merged with the Order-in-Appeal. Similar issue was dealt with in the case of CCE, v. Chellapandi Match Works 2006 (197) ELT 272 (T) wherein it was held that the Order-in-Original was not in existence for review as the original order was merged with the Order-in-Appeal. The Tribunal in the case of Composite Investments Pvt. Ltd. v. CCE 2006 (3) STR 120 (T-Bang.) held that the Commissioner was not empowered to review an order passed by the Adjudicating Authority when an appeal against that order filed before the Commissioner (Appeals) is pending and such order is contrary to provisions of Section 84(4) of Finance Act, 1994. In view of the above, the impugned order has no merit and the same is set aside. The appeal is allowed with consequential relief.
5. This appeal is filed against the Order-in-Appeal No. 33/2005 Central Excise dated 14.2 2005, passed by the Commissioner of Central Excise (Appeals), Bangalore.
6. In the impugned order, the Commissioner (Appeals) has held that the lower authority is right in including the 'handling charges' and 'transactions charges' as part of the taxable value as additional brokerage for Service Tax purpose. The learned Advocate who appeared for the appellants took us through the impugned order and stated that the Commissioner (Appeals) was not justified in stating that the appellants has not produced any bill/other documentary evidence to counter the findings of the lower authority. He invited our attention to Annexure 'D' in Page 38 of Paper Book wherein a letter addressed to the Asst Commissioner giving details of transaction charges issued from National Stock Exchange of India Ltd. for year 1999 - 2003 was furnished. Further he invited our attention to Section 67(a) of the Finance Act which deals with valuation of taxable services in relation to service provider by the stock broker. In terms of the above provisions, the value of taxable service in relation to service provided by a stock broker, shall be the aggregate of the commission or brokerage charged by him on the sale or purchase of securities from the investors and includes the commission or brokerage paid by the stock broker to any sub broker. The handling charges collected from the investors cannot be called as brokerage or commission. Similarly, the amounts collected towards transaction charges by the appellants also cannot be equated to brokerage or commission. It is seen that: the transaction charges collected have been paid to the National Stock Exchange of India Ltd. In Kohler's Dictionary for Accountants, 6^th Edition, the term 'brokerage' is defined as follows; brokerage A commission, paid or accruing to a broker, arising from effecting a deal between seller and buyer, and borne by either party in accordance with custom, regulation or special agreement. It may be fixed, as in stock market transactions, by trade or government bodies, and may take any of various forms, such as a percentage or modification of selling price; a (finder's) fee; an underwriting or other discount (4); a concession or other advantage (whether or not transaction -related).
The handling charges are the expenses incurred for handling shares on delivery. The appellants have clarified that prior to 2001, there used to be physical delivery of scrips and certificates and the appellants were charging towards 'handling' of scrips and certificates. The 'handling charges' were collected from certain investors/clients. In respect of speculative transactions, no handling charges were collected from the investors/clients as there was no handling of scrips and certificates. We are convinced that the handling charge is not in the nature of commission or brokerage for purchase of securities. They are incurred in connection with the delivery of scrips. In fine, we hold that the value of taxable services in respect of a stock broker will not include transaction charges and handling charges. Therefore there is no merit in the impugned order. Hence we allow the appeal with consequential relief.
(Operative portion of the order has been pronounced in the open court on completion of hearing)