SAT disposes of appeal
challenging Circular issued by the National Stock Exchange of India Limited
(‘NSE’), dated July 17, 2018, which inter alia prescribes collection of
Securities Transaction Tax (‘STT’) on physical settlement of stock derivatives;
Notes that (i) NSE had issued the circular, pursuant to SEBI’s circular on
“Review of framework for stocks in Derivatives segment” and (ii) accordingly,
46 scrips were identified for compulsory physical settlement, after the expiry
of the ongoing cycle of derivatives contracts; Accepts Appellant’s submission
that NSE’s caveat about waiting for clarification from the Central Board of
Direct Taxes (‘CBDT’) over ambiguity w.r.t. STT rate to be levied, is
impractical, as clients require clarity on the STT to be paid, and that given
the uncertainty, there could be severe repercussions on the securities market
(particularly in the derivatives segment); Rejects NSE’s contentions regarding
specification of the STT rate in Finance Act and its substantiation on the
caveat; Opines that “the circular does generate considerable
ambiguity… given the ambiguity the circular has generated and the
potential adverse effect it would have on the securities market it is in the
interest of justice for CBDT to consider the matter on top priority..”:SAT
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