15 July 2009
i am a customer of one company and i had reffered some customers to the company by mouth publicity. company is paying me refferal incomee according to some formula which has no relation to amount of prduct slae.They have point system and for every produc sale there are points and whereever there are 3 and 3 points at both wing we get 11500 rupees.for example copany send cheques this way.
Leftcustmer right custmer group group rupees 3 3 11500 2 2 nil 3 300 11500 2 300 nil 3 1000 11500 2 800 nil 6 6 23500 1 400 nil 9 9 34500 9 2 nil Can this income be termed as commission.if not what should be a proper word to descibe this type of income. I am a customer of the cumpany and i recomended only 2 customers once in life time .then thes two brought 2 each in their turn.the process went on and today I have 2 direct and around 7000 indirct custmers in my chain can I be called commission agent here i make it clear that i am not involved in transactions of 7000 persons.
i need expert opinion as service tax department has asked us to register under service tax and pay service tax from 2004 to 2009 . does such type of income comes under service tax.my first 2 refferences were in the year 2002 .
19 July 2009
The transaction you are referring to is network marketing transaction. On the face of it it is a marketing service and you are required to pay ST, off course exemption for Small scale service provider is there. I dont know what is your turnover, but your issue is slightly different. You want to say that you just referred the company to two person, and apart from that you have done nothing. If the liability is high, enagage a good professional to study your case and defend. The issue of network marketing has not been decided till date.
20 July 2009
I joined gold quest by purchasing a single coin in liftime i e on 30/11/2001 and given two referrals one in dec 2001 and other in jan 2002 .this two persons were joined with my reference .my work ended on jan 2002 however i received income continusly . 2004-05 2,68,500 2005-06 1,26,500 2006-07 11,50,000 2007-08 20,70,000 2008 -09 2,53,000
here i may once again add that i have done nothing after jan 2001 i stoped ref persons, even then the chain went on and i got income without my effort continuosly year by year.now i have receved suimmons from service tax and they are asking me to pay around a half million . I stronly belive that As I have not rendered any service after 2001 i am not liable for tax as for as 2004 to 2009 is concerned. I am ready to pay tax for 2001 -2002
CAclubindia
