Whether the share broker's service used by a manufacturer of telecom equipment's for sale of its investment in shares of anothercompany is an input service?

2014 (33) STR 357 (Kar) United Telecom Limited vs. CCEx, Bangalore –I

Facts:

The Appellant was engaged in the manufacture and sale of telecom equipments and was paying excise duty on the same. In the month of November 2008, the Appellant had availed the services of a Stock Broker for selling its investment in the other company's shares. TheAppellant availed Service tax paid on said stock broker's service treating the same as input service. The Revenue authorities and Tribunaldisallowed the claim of the Appellant by contending that the same was not integrally connected to the business of the Appellant.

Before the High Court, the Appellant contended that the stock broker's service was used for the purpose covered by the inclusive part of the definition of "input service".

Held:

The High Court observed that, though the Appellant's activity of investing in the shares was one of the incidental objects as per its Memorandum of Association, the claim for CENVAT Credit of Service tax paid on stock brokers service was not against any liability arising out of the business activity of the Appellant and not relatable to the business activity and hence the High Court found no scope for making any interference with the Tribunal's Order and as such, the appeal was dismissed.