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Regarding liability of service tax

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MANOJ KUMAR SHARMA (Querist)
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03 February 2012 Firm A services (Partnership Firm) is a service provider of "TATA TELESERVICES LTD" engaged IN SALES OF 'TATA DOCOMO'recharge vouchers. 5% discount given to Firm A.In turn the A Services is permitted to resell these coupens to retailers at 3% to 3.5% discount.the results in earning by the A Services in the shape of retention of an amount equal to 1.5% to 2% of M.R.P of E-recharge Vouchers.can the firm A services get the exemption of small service provider because the commisiion received by the firm A services is below than 10 lakhs. pls reply me as soon as possible because it is the matter of service tax audit. pls convey me related notification and circulars.

Arun Gulati

Arun Gulati (Expert)
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04 February 2012 In my view, you are not entitled for benefit Notification No. 6/2005 as you are providing services under a brand name or trade name. In my view, you are liable to pay service tax on 5%, not on your margin as tax is on gross value not on profit margin.. refer section 67 of the Finance Act, 1994.

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