Reg Tax Audit Report & Service Tax

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

28 July 2010 Client is distributor of Airtel compnay for distribution of sim card and recharge coupon. Airtel co. charge service tax on its sale bill. But the distributor is not charging service tax on his bill raised to retailers.

Pls guide whether he is right in his practice or its his liability for service tax (as he has paid service tax to the company)

Secondaly whether this will impact on tax audit report as his sales is mora than 40 lacs

CA. Gurdeep Singh Chawla

CA. Gurdeep Singh Chawla (Expert)
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28 July 2010 THERE IS LIABILITY OF TAX AUDIT

Shyam Lal Naik

Shyam Lal Naik (Expert)
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28 July 2010 For service tax there should be a service provider and a service receiver. In this case airtel is the service provider and the subscriber is the service receiver.

Since the distributor does not provide any service to the subscriber, in my view, he is not entitled/required to charge service tax on sale of sim card and recharge voucher.

Since the transaction is out of tax net, no impact on tax audit report.

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Querist : Anonymous

Querist : Anonymous (Querist)

28 July 2010 Sir the distributor is selling the product to Retailer who is no the ultimate subscriber. As the company is charging service tax to its bill, will it not the distributor liability to raise bill with service tax charge.

Pls explain.

Shyam Lal Naik

Shyam Lal Naik (Expert)
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28 July 2010 Airtel is charging for the sim card and the vouchers as a consideration for providing telecommunication service, which is absent in the case of the distributor.

Whether the distributor sells to the retailer or the final consumer, does not make any difference.

Querist : Anonymous

Querist : Anonymous (Querist)

28 July 2010 Sir I am little bit confused.

Pls explain it means if a person dealing in a business where service tax is applicable but he is the retailer or distributor for that then he has no liability towards service tax and he does not require for the service tax.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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03 August 2010 My view the distributor is not coming under the service tax applicablity( basic thereshold exemption Rs.10 Lakhs)

Querist : Anonymous

Querist : Anonymous (Querist)

27 October 2010 Sir, one of my client is distributor of Bharti airtel Ltd for Prepaid Sim card and recharge coupon.
As the distributor is intermediate between company and customer so He is not required to registered under service tax Act.

But My client received a Notice from service tax department mentioning:-

" You engaged in providing services to M/s bharti Airtel by way of selling of recharge coupon, SUK (starter's user kit)/electronic airtime, bill collection etc to others which are taxable under the category of 'Business Auxiliary Service' under service tax law."

And in this regards they are demanded the records of accounts, invoices, IT return for last 5 years.

Sir pls guide Is there any judgement of court or section in this regards mentioning about non applicability of service tax on distributor.

Also pls guide how to tacle this

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