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commission on auxilliary service on selling of tea

CA Dipanweeta Mukherjee (Proprietor) (102 Points)

26 October 2010

Dear Sir,

Please clarify whether service tax is applicable on following services relating to tea like.sending of samples Receiving offer from buyers, accepting price offer from the buyers, the producer to send a copy of arrival and weightment, to enable the service provider to receive the payment on the producer behalf, sending the proceeds to the producer, service provider to facilitate the recovery of claims made by the buyer from seller, sign bill of exchange on behalf of the producer in the manner & process like bill discounting. On all this services the service provider will receive a commission of 1% on the cost per kg of tea

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3 Replies

Madhukar N Hiregange (Chartered Accountant) (39034 Points)
Replied 27 October 2010

Covered under BAS as it is market development/ marketing inititve. The exemption under not. 8/2004 specifically covers the same and therefore there may be no liability.

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CA Dipanweeta Mukherjee (Proprietor) (102 Points)
Replied 27 October 2010

but the service provider is earning commission and the service provided by the service provider is included in extended defination of commission agent so how iservice tax is not applicable

Ganesh (CA) (111 Points)
Replied 28 October 2010

Dear Dipanweeta,

This might help.

Service tax — Effective rates of duty for Mandap keeper, service provided by Hotels, Business auxilliary service provided by Commission agents and Tour operators — Amendment to Notification Nos. 12/2001-S.T., 13/2003-S.T. and 2/2004-S.T.

In exercise of the powers conferred by section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby directs that the following notifications of the Government of India in the Ministry of Finance (Department of Revenue), as specified in column (2) of the Table below, shall be amended or further amended, as the case may be, in the manner and to the extent specified in the correspon-ding entry in column (3) of the said Table, namely :-

Table

S. No.	Notification No. and date	Amendments
(1)	(2)	(3)
1.	12/2001-Service Tax, dated the 20th December, 2001 [G.S.R. 907 (E) dated the 20th December, 2001]	In the said notification, for the words “from the whole of the service tax leviable thereon under section 66 of the said Act”, the words “from so much of the service tax leviable thereon under section 66 of the said Act, as is in excess of the service tax calculated on a value which is equivalent to sixty per cent. of the gross amount charged from the client for the said taxable service” shall be substituted.
2.	13/2003-Service Tax, dated the 20th June, 2003 [G.S.R. 504 (E) dated the 20th June, 2003]	In the said notification,- (i) in the preamble, for the words “commission agent from the service tax leviable thereon under sub-section (2) of section 66 of the said Act”, the words “commission agent in relation to sale or purchase of agricultural produce from the service tax leviable thereon under section 66 of the said Act” shall be substituted; (ii) for the Explanation, the following shall be substituted, namely :- “Explanation. - For the purposes of this notification, - (i) “commission agent” means a person who causes sale or purchase of goods, on behalf of another person for a consideration which is based on the quantum of such sale or purchase. (ii) “agricultural produce” means any produce resulting from cultivation or plantation, on which either no further processing is done or such processing is done by the cultivator like tending, pruning, cutting, harvesting, drying which does not alter its essential characteristics but makes it only marketable and includes all cereals, pulses, fruits, nuts and vegetables, spices, copra, sugar cane, jaggery, raw vegetable fibres such as cotton, flax, jute, indigo, unmanufactured tobacco, betel leaves, tendu leaves, rice, coffee and tea but does not include manufactured products such as sugar, edible oils, processed food and processed tobacco.”
3.	2/2004-Service Tax, dated the 5th February, 2004 [G.S.R. 101(E) dated the 5th February, 2004]	In the said notification, for the words “ten per cent.”, the words “forty per cent.” shall be substituted.