‘List A’ shall include the present members of the company

‘List A’ shall include the present members of the company, i.e., m.embers whose

names appear in the company’s register of members at the time of the winding-up of the company.

‘List B’ shall include the past members of the company. i.e., members who ceased to be members within one year preceding the commencement of the winding-up of the company.

If the assets of a company in liquidation are insufficient to meet the debts and liabilities of the company and the expenses of the winding-up and to repay the nominal value of the company’s shares, the contributories may be called upon to make good the difference. The contributories who are primarily liable to satisfy the deficiency of the company’s assets are those who are members of it at the commencement of the winding-up, and they are known as the ‘A List’ contributories. But if the Court, or the liquidator in a voluntary winding-up, approves a transfer of shares after the commencement of the winding-up, the transferee, or if there are successive transfers, the latest transferee, will be a’ A List’ contributory in respect of the shares. In a company limited by shares, the only limit on an’ A List’ contributory’s liability is the amount unpaid on his shares, and in a company limited by guarantee, the only limit is the maximum amount guaranteed, plus the amount unpaid on his shares if the company has a share capital [Pennington’s Company Law, Fifth edition, page 928].

Any person who was a member of the company within a year before the commencement of the winding-up may also be called upon to contribute, and such contributories are known as ‘B List’ contributories.

In the event of a company being wound-up every present and past member shall

be liable to contribute to the assets of the company to an amount sufficient

(a) for payment of (i) its debts and Habilities, and (ii) costs, charges and expenses

of the winding-up, and

(b) for the adjustment of the rights of the contributories among themselves.

Liability of Present Members

The liability of a present member (i.e., ‘List A’ contributory) shall be limited

1. In the case of a company limited by shares, to the amount remaining unpaid

on the shares; and

2. In the case of a company limited by guarantee, to the amount undertaken to be

contributed by him to the assets of the company in the event of its being wound-up.

. Explain the nature and extent of the liability of a contributory

Nature of Liability of Contributory (Section 429)

Sub-section(l) of Section 429 provides that the liability of a contributory shall create a debt accruing due from him at the time when his liability commenced, but payable at the times specified in calls made on him.for enforcing the liability.

The object of sub-section (1) of Section 429 is to make clear the time when the cause of action against a contributory on his failure to satisfy the calls made on him by the liquidator would arise. However, once a call has been made, the liability of the contributory to pay it becomes a statutory debt. A new liability to pay the unpaid balance commences. “It is settled in a long course of decisions that the members of a company in liquidation are liable in respect of unpaid calls even though the calls were made by the company before it went into liquidation and the suit of the company for its realisation had become barred by time. The principle of these decisions is that Section 429 creates a new liability on the shareholders in respect of such calls, which is distinct from and independent of the rights which the company had against them before the winding-up” [Pokhar Mal Vs. Flour and Oil Mills Co. Ltd. AIR [1934] Lah. 1015]. As the debt under the statute is a new creation, quite distinct and apart from any creditor’s claim to recover from the shareholder, as a contributory in the windingup, the unpaid share money will not be affected by the fact that prior to the winding up, the company had issued calls for the amount and allowed the recovery under these calls to become time barred [East Bengal Sugar Mills Ltd., In re (1914) 11 Compo Cas. 169 (Cal.)]. Since the power to make calls in a compulsory winding up is vested in the court under Section 470, the statutory liability of a contributory to pay can arise only under a call validly made, that is, a call made by the court and not by the liquidator himself [Associated Banking Corporation of India Ltd. V s. Mahomed Akbar AIR 1950 Born. 386]. The proper procedure seems to be that the Court shall first make an order for calls to be made, and liquidator in pursuance of the order shall make the calls.

Ex-contractu and Ex-lege Liability. Under Section 429, the liability of a member to be included in the list of contributories is not ex contractu, i.e., it does not arise as a result of the contract of membership; his liability is ex lege which means that it arises by reason of the fact that his name appears in the Register of members. Thus, a member shall be liable even where the allotment was void. Again, he cannot escape liability as a contributory where he had sold his shares to a purchaser who has not got the shares registered in his name.

Before a company goes into liquidation, the liability of a member to contribute is measured by the contractual obligation arising from membership. But after liquidation, Section 429 imposes a new liability on the shareholders in respect of unpaid calls made before or after the winding-up. Such calls can be recovered even if they are barred by limitation before the order of winding-up was made.

Extent of Liability of Contributories (Section 426). For determining liability of contributories, the list of contributories shall be prepared in two parts, viz., Ust A and Ust B.

Contributory’s Petition [Section 439(1)©]

A ‘contributory’ means any person liable to contribute to the assets of a company in the event of its being wound up. Except for this purpose, the term ‘contributory’

includes a holder of fully paid shares. .

A ‘contributory’, however, may petition:

(i) On the ground that the number of members is reduced below the statutory

minimum of seven members in case of public company and two in case of private company.

(ii) on any other ground, if the shares in respect of which he is a contributory or some of them were originally allotted to him or have been held by him and registered in his name for at least six out of the eighteen months preceding the commencement of the winding-up, or have devolved upon him through the death of the former holder.

Thus, in Re Gattapardo Ltd. [1969] 2 All ER 344, a transfer though executed and stamped in June 1967, was registered in October 1968, the shareholder presented a winding up petition in December, 1968. Held, the petition was not valid since she had not held shares for six months as required by the Act.

A holder of fully paid shares is a contributory for the purpose of a petition not because he is liable to contribute (which he is not) but because he may have an interest in the assets in a winding up. In Re.othery Construction Co. [1966] 1 All ER 145. Buckley, f. observed, “In my judgement it remains a rule of this Court that where a fully paid shareholder petitions for compulsory winding up, he must show, on the face of his petition, a prima facie probability that there will be assets available for distribution amongst the shareholders. But in India this judgement is not applicable in view of

Corporate Laws &: Secretarial Practice

Section 439(3). “A contributory shall be entitled to present a petition for winding-up a company notwithstanding that he may be the holder of fully paid-up shares, or that the company may have no assets at all or may have no surplus assets left for distribution among the shareholders after the satisfaction of the liabilities.” This position presumably stems from the proposition that a shareholder as such has a stake in the affairs of the company irrespective of whether he is holder of fully paid shares. However, the Court has complete discretion whether to order winding up on taking totality of circumstances into account.

technical inspection and certification"means inspection or examination of goods or process or material o

Indian Service Tax

Technical Inspection and Certification Service

Effective Date

1/7/2003.

Authority

Notification No. 7/2003-ST, dt. 20/6/2003 (For full text see under "Business Auxiliary Service").

Rate of Service Tax

8% upto 9/9/2004. 10% from 10/9/2004 - Cess 2% of 10% = 0.2. Total ST = 10.2%.

Definitions

"technical inspection and certification"means inspection or examination of goods or process or material or any immovable property to certify that such goods or process or material or immovable property qualifies or maintains the specified standards, including functionality or utility or quality or safety or any other characteristic or parameters, but does not include any service in relation to inspection and certification of pollution levels; [Section 65(108)]

"technical inspection and certification agency" means any agency or person engaged in providing service in relation to technical inspection and certification; [Section 65 (109)]

Taxable Service

Services provided in relation to technical inspection or certification.

Value of Taxable Service

Gross amount charged for rendering such services Exemption: Inspection and certification of pollution levels.

Person liable to Pay

Any person or agency providing such services.

Head of Account

Tax Collection - 00440249, Other Receipts - 00440250, Deduct Refunds - 00440251.

Main text of Department Circular/Trade Notice

[Para 2.5 of Cir.No. 59/8/2003, dated 20/6/2003]

2.5 Technical Inspection and Certification Services:

A doubt has been raised whether certification given in respect of immovable property should fall under the purview of 'technical inspection and certification services'. In this regard it may be recalled that earlier, CBEC vide its order No. 1/1/2002, dated 26/02/2003, issued under Section 37B (of the Central Excise Act as made applicable to service tax) had clarified that certification given under authority of any code or statute can not be considered as a consulting engineer service. However, the new service included in 2003 budget, namely 'technical inspection and certification services' would cover certification of all types including that of immovable property. Therefore, it is clarified that such services become taxable from the notified date.

"survey and exploration of minerl'means geological, geophysical or other prospecting, surface or sub-surface surveying

Indian Service Tax

Survey and Exploration of Mineral Services

Effective

Date: 10/09/2004.

Authority: Finance (No.2) Act, 2004

Rate of Service Tax: 10% - Cess 2% of 10% = 0.2. Total ST = 10.2%.

Definition

"survey and exploration of minerl'means geological, geophysical or other prospecting, surface or sub-surface surveying or map making service, in relation to location or exploration of deposits of mineral, oil or gas; [Section 65 (104a)]

Taxable service: Taxable service means any service provided to a customer, by any person, in relation to survey and exploration of mineral; [Section 65 (105) (zzv)]

Value of taxable service: Gross amount Exemptions: See Notification No. 18/2004-ST, dt. 10/9/2004 at the end of the Chapter of' "Airport Services". Soil testing, non-mineral objects

Person liable to pay

Survey and Exploration of Mineral Service provider

Head of Account

To be issued.

Main text of Department Circular/Trade Notice

F.No. B2/8/2004-TRU Date: 10/9/2004

07 . Survey and exploration of minerals

The service tax would be leviable when the service of survey and exploration of minerals is provided by any person to a customer. The survey and exploration may result in locating ores, crude etc. Subsequent to survey and exploration, the mineral is extracted and transported for refining, processing and production. The service tax under this category would be limited to the services rendered in relation to survey and exploration only and not on the activity of actual extraction after the survey and exploration is complete. The transport, refining, processing or production of the extracted products would also be out of the ambit of service tax. Activities such as seismic survey, collection/processing/interpretation of data and drilling or testing in relation to survey and exploration would, however, fall within the ambit of taxable service.

"storage and warehousing"includes storage and warehousing servicesforgoods including liquids and gases

Indian Service Tax

Storage And Warehousing Service

Effective Date: 16/08/2002.

Authority: Notification No. 8/2002-ST, dt. 1/8/2002 (for full text of Notification see under'Beauty Parlour').

Rate of Service Tax: 8% from 14/5/2003 (5% upto 13/5/2003). 10%from10/9/2004 - Cess 2% of 10% = 0.2. Total ST = 10.2%.

Definition: "storage and warehousing"includes storage and warehousing servicesforgoods including liquids and gases but does not include any service providedforstorage of agricultural produce or any service provided by a cold storage; [Section 65(102)]

Taxable service: Storage and warehousing services provided by a storage or warehouse keeper in relation to storage of goods except agricultural produce or service provided by cold storage.

Value of taxable service: Gross amount charged by the storage or warehouse keeperfromthe customers.

Exemptions

• Agricultural produce, cold storage

• Cloak room services

• FCI

• Renting of premises

• Port trust

Person liable to pay: StorageorWarehouse keeper.

Head of Account

Sl. Code SCCD Minor-head 004400148 Storage and Warehouse Services 00440192 Sub-head 00440014801 Tax Collection 00440193 119 Sub-head 00440014802 Other Receipts 00440194 110 Sub-head 00440014803 Deduct Refunds 00440195 111

Main text of Departmental Circular/TN

F.No. B11/1/2002-TRU, Date: 1/8/2002

• The section referred to hereinafter are the sectionsorclauses of the Finance Act, 1994 as amended by the Finance Act, 2002. Reference to sub­clauseorclause means clauseorsub-clause of Section 65 of the Finance Act, 1994 as amen led by the Finance Act, 2002.

• As per clause (87), "storage and warehousing" includes storage and warehousing services for goods including liquids and gases but does not include any service provided for storage of agricultural produce or any service provided by a cold storage. As per sub-clause (zza) of clause (90), the taxable service is any service provided, to any person, by a storage or warehouse keeper in relation to storage and warehousing of goods.

• Storage and warehousing service for all kinds of goods are provided by public warehouses, private warehouses, by agencies such as the Central Ware Housing Corporation, Air Port Authorities, Railways, Inland Container Depots, Container Freight Stations, storage godown and tankers operated by private individuals etc. The storage and warehousing service provider normally make ahrangement for space to keep the goods, loading, unloading and stacking of goods in the storage area, keeps inventory of goods, makes security arrangements and provide insurance cover etc. Service provided in ports has already been covered under the category of port service.

• Service provided in relation to agriculture produce and service provided by cold storage is outside the ambit of the levy. Doubts have been raised about the scope of term “agricultural produce". In order to clarify the scope of this tem1 beyond doubts, an order has been issued under the power vested under Section 95 of the Finance Act (see Order No. 1/2002-ST, dated 1/8/2002). As clarified in the order, the term agricultural produce would cover all cereals, pulses, fruits, nuts and vegetables, spices, copra, sugar cane, jaggery, raw vegetable fibres such as cotton, flax, jute etc., indigo, unmanufactured tobacco, betel leaves, tendu leaves, and similar products. However, manufactured products such as sugar, edible oils, processed food etc., will not come under the purview of the term 'agricultural produce'.

• It has been stated that in some case a storage owner only rents the storage premises. He does not provide any service such as loading/unloading, stacking, security etc. A point has been raised as to whether service tax would be leviable in such cases. It is clarified that mere renting of space cannot be said to be in the nature of service provided for storage or warehousing of goods. Essential test is whether the storage keeper provides for security of goods, stacking, loading/unloading of goods in the storage area.

• A point has been raised by the Airport Authority of India (AAI) that they have established cold storage for perishable goods at cargo complexes at various places as part of cargo warehousing activities and whether the exemption provided in respect of cold storage would be applicable to these cold storages also. It is clarified that service provided by a cold storage has been specifically excluded fTom the tax net. Therefore the service of cold storage provided by AAI will also be exempt.

• Another point raised is that AAI are collecting terminal charges which is only a facilitation charge for providing a terminal and as such does not involve any service. As per the Notification No. Cargo/ 13519/Pt. I , dated 4/6­/1993 of the Intemational Airport Authority of India "terminal charges" means charges payable to or collected by the Authority or Cargo Handling Agency for use of facilities for processing of cargo. As per this notification "storage and processing charges" specifically include terminal charges also. Therefore service tax is leviable on such charges.

• A doubt has been raised whether cloak room services for passenger's luggage in railway stations, bus stations etc., would come within the purview of storage and warehousing services. It is clarified that these are passenger terminal services incidental to rail transport qr road transport, they do not come within the purview of storage and warehousing services.

• The Central Warehousing Corporation has stated that they have more than 450 warehouses which are controlled by 17 regional offices. The billing is done both at the warehouse level and at the Regional Office level. However accounting for the warehousing charges as well as the cargo handling services is done only at the Regional Office level. Therefore, they have requested that only their Regional Offices should be registered for service tax purposes. The Service Tax rules empower the Commissioner of Central Excise to register only those offices which have centralised accounting facility. The Commissioners may exercise this power in such cases and register only the regional offices of CWC.

• Another point made by the CWC is that they engage handling and transport contractors (H&T contractors) to provide handling and transport services who would be charging them service tax for cargo handling services. CWC add supervision charges and raises the bill to the customers. For warehousing they raise a separate bill. The question is whether CWC is liable to pay service tax on cargo handling services and if so, whether they can take credit of the tax paid on cargo handling services by the H&T contractor. Similar situations may exist in respect of other storage and warehouse keepers. It is clarified that if the storage and warehouse keeper undertakes cargo handling services also and raises its own bill to the customer for such service, then he would be liable to pay service tax under the category of cargo handling services also. However, he would be eligible to take credit of service tax paid on cargo handling services rendered by the H&T contractors and adjust the same against his service tax liability on cargo handling services provided he raises a separate bill for the same to his client. In other words, he cannot adjust the credit against storage and warehousing service charges.

Storage of empty containers

Cir. No. 60/9/2003-ST, Date: 10/7/2003

Sub:- Levy of service tax on storage of empty containers regarding.

I am directed to say that a doubt has been raised regarding levy of service tax on storage of empty containers. The matter has been examined. It is clarified that the handling/storage and warehousing of empty containers would be covered within the scope of storage and warehousing services, as it is covered under the heading goods under Section 65(87) of the Finance Act, 1994. The Service Tax would be leviable on it. Further, the clarification issued vide letter No. F.B.II/ I/2002/TRU, dated 1/8/2002 regarding empty containers not to be considered as Cargo for Cargo Handling Services, has no relevance in the instant case.

Storage of liquid cargo

Order No. 2/1/2002-ST, Date: 24/4/2002

N.B.: For full text see under "Clearing & Forwarding Agent".

It has been represented by Collector of Central Excise, Kanpur that a Stock Broker registered with Kanpur Stock Exc

Indian Service Tax

Clarifications

[TN No. 3/94-ST, dated 19/10/1994 of the Indore Collectorate]

Attention of the Trade is invited that certain doubts have been expressed by the trade and the field formations, requiring clarification from the Board. After considering the reports of the Collectorates, following clarifications are being issued:

• It has been represented by Collector of Central Excise, Kanpur that a Stock Broker registered with Kanpur Stock Exchange and is having his office branch outside the jurisdiction of Collectorate of Central Excise, Kanpur. Whether the Stock Broker should apply for registration in Kanpur Collectorate for his office outside the jurisdiction of Collectorate of Central Excise, Kanpur or with the Collectorate where his branch office is located.

  Decision: A Broker who is registered with Kanpur Stock Exchange has to apply for registration with Collectorate of Central Excise, Kanpur. All the offices of this broker irrespective of location will be registered with Collectorate of Centra] Excise, Kanpur.

• Wheter sub-brokers are covered by Service Tax?

  Decision: At present sub-brokers are not covered.

• Collector of Central Excise, Bolpur has raised the point that Sikkim Stock Exchange has not yet been recognised and whether Service Tax can be collected for the transaction in Sikkim Stock Exchange.

  Decision: Service Tax is required to be collected from Stock Brokers. Stock-Broker has been defined in the Act itself i.e. stock broker means a stock broker who has either made an application for registration or is registered as a stock-broker in accordance with the rules and regulation made under the Securities & Exchange Board of India Act, 1992. Hence, all stock-brokers in the jurisdiction of Collectorate of Central Excise, Bolpur will be governed by service tax scheme.

• Whether the amount of Service Tax charged/collected is required to be shown separately in the Contract Note/Bill?

  Decision: It is desirable for the reasons for transparency that Service Tax charged/collected is shown separately in the Contract Note/Bills.

• Collector of Central Excise, Calcutta-I has raised the point that service brokers are engaged as underwriters. These Service Brokers are receiving commission for the Company which floats its securities into the market. Whether Service Tax is required to be levied on this commission?

  Decision: Taxable service means any service provided to an investor, by a stock-broker in connection with the sale or purchase of securities listed on a recognised stock exchange. The commission charged by stock-broker as underwriters is for floating securities. Hence, it is not covered.

Jobbing, Own Trading etc.

Cir. No. 20/14/96-ST, Date: 31/12/1996

Sub: Service Tax - Transaction amounting to taxable service subject to service tax.

The Trade is hereby informed that certain doubts whether the following transactions amount to taxable service subject to service tax have been raised for clarification from the Board:

(A) Jobbing - Transactions entered on principal to principal basis between member brokers of the same stock exchange.

(B) Own Trading - Transactions entered on their own account by the brokers.

(C) Arbitrace - Transactions entered into by two brokers of different stock exchange in order to profit from price difference between two markets.

2. The matter has been examined by the Board in consultation with other field formations. As per Section 65 (6) of Finance Act, 1994, taxable service means any service provide to an invest by a stock broker in connection with the sale or purchase of securities listed at recognised stock exchange. In view of this definition, the points raised above are clarified below:­

(A) When the transaction is on principal to principal basis between brokers, no investor is involved and as such no taxable service is provided and therefore, no service tax is chargeable.

(B) Where a broker enters into a transaction on his own account with an investor who is a non-member of the stock exchange the service provided will be taxable service and subject to service tax.

(C) In case of arbitrage transaction i.e. the transaction between two brokers of different stock exchanges, the service is provided by a broker i.e. the member of a stock exchange to a non-member of that stock exchange even though the investor may be a member of another stock exchange. Their being an investor involved in the transaction, the service so provided to the investor will be a taxable service subject to service tax.

Registration with NSE

Cir. No. 12/6/96, Dated: 16/9/1996

Sub: Service Tax - Registration of Stock Brokers of National Stock Exchange.

I am directed to refer to Para 1 of Board's Service Tax Circular No. 4/4/ 94, dated 6/9/1994, wherein it was clarified that a stock broker registered with a particular Stock Exchange has to apply for registration with the Commissioner of Central Excise having jurisdiction over the place in which the concerned Stock Exchange is situated, irrespective of whether all offices of the stock broker are situated within or outside the jurisdiction of the said Commissionerate. Doubts have been expressed regarding registration of members/Stock Brokers of National Stock Exchange having its Headquarters at Mumbai.

2. The matter have been examined by the Board. National Stock Exchange permits its members to operate from any part of India through satellite network owned, operated any managed by National Stock Exchange using Very Small Aperture Terminals (VSAT) installed at trading members office whereas the members of local stock exchange is required to carry on business compulsorily within the jurisdiction of the said Stock Exchange where he is registered.

3. Board is of the view that Trading members/Stock Brokers of National Stock Exchange will have to register their premises with the Central Excise Commissionerate having the jurisdiction over the place where trading membership is granted and infrastructural facilities are provided for installing the Very Small Aperture Terminals and operating the business.

Registration with OTCEI

[TN No. 141/96, dated 4-12-1996 of Cochin Commissionerate]

Sub:- Service Tax - Registration of Members/Dealers Over the Counter Exchange of India (OTCEI).

Attention is invited to this office Trade Notice No. 113/96, dated 14/10/1996 wherein it has been decided that Trading Members/Stock Brokers of National Stock Exchange will have to register their premises with the Central Excise Commissionerate having jurisdiction over the place from where trading member operate their business.

The above instructions will apply mutatis mutandis to the members/dealers of Over the Counter Exchange of India (OTCEI). Thus the members and dealers of OTCEI are required to register with Central Excise Commissionerate having jurisdiction over the place of operation of their business. Similarly if domestic stock exchanges allow trading by members/dealers through computers from other centres outside their jurisdiction (viz. BOLT) such members/dealers are required to be registered with the Central Excise Commissionerate having jurisdiction over the place of operation of their business. It may also be noted that even if the member/dealer has registered himself as a stock broker of a conventional stock exchange for transaction of securities of that stock exchange, he has to separately apply for registration as a member/dealer ofOTCEI, National Stock Exchange etc. for sale or purchase of securities listed on such exchange.

Double Taxation

[Trade Notice No. 63/96, dated June, 1996 of the Pune Commissionerate]

Sub: Service Tax - Buying/Selling of securities by a Member of one stock exchange through a member of another. Stock exchange on behalf of an investor - Regarding.

Certain doubts were expressed regarding 'whether Service Tax is chargeable at both the ends, when an investor is provided with taxable service by two brokers of different stock exchanger' by various quarters.

The situation envisaged is as under:

If a Calcutta based investor buys a security quoted on the Bombay stock exchange through his broker in Calcutta, he ends up paying service tax twice, first to the Bombay stock exchange broker & then to the Calcutta stock exchange broker through whom the initial order was placed. In a situation like this, it has been represented that, it amounts to double taxation on a transaction of one' single security.

The matter has been examined by the Board. According to Section 66 of the Finance Act, 1994, the Service Tax is to be charged at the rate of 5% of the 'Value of taxable service'. In respect of sale & purchase of securities, taxable service means any service provided to an investor by a stock broker in connection with the sale or purchase of securities listed on a recognised stock exchange. The valuation of taxable service in relation to service provided by a stock broker to an investor shall be the aggregate commission or brokerage charged by him on the sale or purchase of securities.

In the situation pointed out above, the investor is provided with taxable service by two brokers. First by the Bombay stock exchange broker through the Calcutta stock exchange broker and then by the Calcutta stock exchange broker.

Since, the Commissionlbrokerage is charged at both the ends, the charge of service tax at both the ends is both conceptually & legally correct. The investor placed his order for buying a security quoted at the Bombay stock exchange for the reason that either it is not available at the Calcutta stock exchange or the price is more beneficial at the Bombay stock exchange. It is open to the investor to either place his order on the Bombay stock exchange broker direct or through his Calcutta stock exchange broker. In the former case, he would have to pay service tax only on the service provided by the Bombay stock exchange broker. In the latter case, he pays higher commission paid to him by the Calcutta stock exchange broker which includes the brokerage of the Bombay stock exchange broker also for the service provided to him at both the exchanges through the Calcutta stock exchange broker. It can't therefore be said that the investor is paying service tax twice. The investor in fact, pays double commission for avoiding the hassless involved in going to the Bombay stock exchange broker direct.

The service tax being the percentage of the brokerage charged trom the investor there is no double taxation involved. Service tax charged is only incidental to the charging of the commissionlbrokerage charged by the brokers.

It is, therefore, clarified that charging of service tax from an investor who is provided with taxable service by two brokers of different stock exchanges does not amount to double taxation.

Showing Brokerage Separately

Cir. No. 15/9/1996, Date: 4/10/1996

Sub: Service Tax - Showing of Service Tax on brokerage separately on the Bill.

Certain doubts have been expressed regarding showing Service Tax collected/charged separately, on the contract notelbills.

It was earlier clarified by the Board, that, it is desirable for the reasons for transparency, that, Service Tax charged/collected is shown separately in the contract notelbills.

The matter has been re-examined by the Board. It has been observed that there is lack of uniformity in showing Service Tax collected/charged separately on the contract notes or bills. Hence, to avoid non-uniformity of practice it has been further clarified by the Board that, the Stock Brokers should prominently indicate the amount of Service Tax in the Bill relating to sale or purchase of securities.

M/s. Pune Stock Exchange Co. Ltd./National Stock Exchange & OTCEI are requested to bring the contents of this trade notice to the noticeoftheir Stock brokers/trading members/& dealers.

Notification

Prior to 10/9/2004

[Notification No. 25/2004-ST, dated 10/9/2004]

Forfull text see under "Banking & Other Financial Services".

Case Law

No service tax when one stock broker sells stock to another stock broker - 1999 (110) ELT 925 (New Delhi - Cegat).

No tax if brokerage includes service tax - 1996 (88) ELT 566 (Mumbai- Cegat).

No levyofservice taxonnotional amount - 1998 (98) ELT 515 (Ca1. ­Cegat).