04 September 2012
A Distributor is selling prepaid recharge voucher to retailer on behalf of co. Is this transaction is liable for service tax? If yes/ no please provide circular.
05 September 2012
Distributor of recharge vouchers are exempted from payment of service tax. Please see the mega notification for negative list No.25/2012 dt 20.06.12.
Sl No.29. Services by the following persons in respective capacities -
a selling agent or a distributor of SIM cards or recharge coupon vouchers;
Since these are treated as commodities there is no service tax.
06 September 2012
Please read this case carefully & now tell me distributor is liable for service tax and also provide me related case low for valid evidence
In 'Commissioner of Service Tax, Mumbai V. Reliance Communications Ltd.,' 2008 -TMI - 30438 - CESTAT MUMBAI the respondents were engaged in providing services under the category of telephone services, on line information and database access and retrieval services, leased circuits etc., The respondents filed the refund claim on the ground that they have paid the service tax on Maximum Retail Price (MRP) of the recharge coupon vouchers for their prepaid services but the recharge vouchers had actually been sold to the distributors at a discounted price from the MRP and some had also been distributed free of cost to distributors/operators. The claim was filed on the ground that the money value of the discount given on the recharge vouchers had not been received by the respondent and hence service tax is not payable on those as per Explanation (2) of Sec. 67 of the Finance Act, 1994 and Rule 6 of the Service Tax Rules, 1994. The refund claim was rejected on the ground that the invoices submitted in support of the claim were of Reliance Communications Infrastructure Ltd., ('RCIL' for short) and not respondents viz., Reliance Communications Ltd., ('RCL' for short). The tribunal held that RCIL was authorized by RCL to issue invoices on their behalf. It is also undisputed that recharge coupon vouchers were sold by the RCIL to the distributors at a value which is less than that is printed on them. If that be so, it is the fact the RCIL has recovered only discounted value from the distributors. Provisions of the Finance Act, 1994 are that the service tax liability on a service provider is only for the amount which he gets paid. The tribunal further held that RCIL is a service provider and having paid the service tax liability on the entire MRP of the recharge coupon vouchers they are eligible for the amount of the refund claim on the amount which is not realized by them from their distributors.
CAclubindia
