joji jose (audit manager) (242 Points)
23 October 2010Dear sir,
One of our client doing the business of supply of Recharge coupens of one Telecom Company. The company is issuing bills to the firm including serive tax. But the firm not collecting service tax for the sale of coupons. They said that the company is paying service tax on behalf of them so they are not liable to collect and pay tax. Whether their view is correct. Whether they have to collect and pay tax . They are also providing activation of SIm cards . Please guide me in this regard
Hardeep Singh Lamba
(Practicing Chartered Accountant Proprietor HSL & Associates)
(30 Points)
Replied 24 October 2010
Dear Joji
As per the given facts I understand that your firm acts as an agent to the telecom company who is engaged in sale of recharge coupons/ SIM cards on behalf of Telecom Company.
Accordingly, basis the understanding if the firm is an agent engaged in undertaking any activities relating to sale or purchase of goods or services on behalf of another , then the such services fall under ambit of Business Auxiliary services (‘BAS’) and the firm is liable to pay service tax (Note: that in case firm is availing threshold exemption of 10 lacs then it may opt to pay or not to pay the said tax)
Please note that the taxable category is determined above is based on assumption that firm is acting as an agent to Telecom Company. Therefore, it is suggested that before taking such a view please get the contract entered between the telecom company and firm reviewed from a service tax consultant.
In case you require service tax review, advisory and compliance assistance then please contact
Thanks and regards
Hardeep Singh Lamba
Service tax consultant
Chartered Accountant
+91-9891535339
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