Alankit Assignments Ltd. v. CST

FINANCE ACT, 1994

--Business Support Services--Services provided by broker to sub-broker on cost sharing basisTaxability----Where the arrangement between the assessee and the sub-brokers was in the form of cost sharing and not in the form of a service provider-service receiver relationship, therefore, there was no justification for levy of service tax under the category of 'Business Support Services'.--Assessee-company was engaged in providing stock-broking services. The assessee made arrangements for a Virtual Private Network (VPN)to provide the facilities for interconnection of sub-brokers with the assessee and to access various stock exchanges and recovered a part of the cost of the VPN from the sub-brokers. Revenue raised demand of service tax on charges recovered under the category of 'Business Support Services', by taking the view that the assessee had provided support services for business of the sub-brokers. Held: The assessee had set up a VPN, and such network was utilised not only by the assessee but also its sub-brokers to access the various stock exchanges for putting through their transaction in securities. Arrangement for the VPN was not made by the assessee by way of a support service for the sub-brokers. Evidently, there was no service provider-service receiver relationship between the assessee and the sub-brokers. A part of the cost involved in the VPN was recovered from sub-brokers as their share of the expenditure, therefore, there was no justification for levy of service tax under the category of 'Business Support Services'.