service receiver or provider

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

23 February 2011 I am a reliance distributor. I am selling company's simcard & recharge coupan also erecharge.
they raised invoice of recharges with service tax but i am selling on company mrp no additional service tax taken by me. so company ask to take registration no. if you want to continued dealership.????
If I am selling on company price no addition service tax collection Do I need to get registered ?
If yes, what category I will belonged to ?
Is service provider or service receiver ?
If its exemption from service tax, Pls give me the notification withwhom I need to file s.t return.?

Thank u very much

All of You Sir,,,
Have a great time

CA Unnikrishnan Nair N

CA Unnikrishnan Nair N (Expert)
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23 February 2011 If you are trading sim/recharge coupons, no service tax in your hands. But if it is commission basis, it is taxable under BAS. Basic exemption is not available because of trade mark.

Querist : Anonymous

Querist : Anonymous (Querist)

23 February 2011 how to file S.T Return and on which basic ???
Which is my Category Service provider or Receiver ?
I have only to shown Commission income in ST Return or not ?

Please try to sort out my queires.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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24 July 2025 Great questions — let’s clarify your service tax liability and classification step by step based on your case as of 23 February 2011 (pre-GST era).

✅ Summary of Your Role:
You are a distributor of Reliance:

Selling SIM cards, recharge coupons, and e-recharges.

Reliance charges service tax on recharge coupons (on their invoice to you).

You sell at MRP, no extra service tax collected by you from customers.

Reliance is asking you to get Service Tax registration to continue dealership.

⚠️ Critical Distinction:
You are not just trading goods — you are acting on behalf of the telecom company, which means:

Your income (usually as commission or margin) is taxable under “Business Auxiliary Services (BAS)”.

🧾 Classification for Service Tax (Pre-GST):
Category Explanation
Service Provider ✔️ Yes, because you're providing service to Reliance (as a distributor/agent).
Nature of Service Business Auxiliary Service (BAS) under Section 65(105)(zzb) of the Finance Act
Taxable Value Only the commission/margin received from Reliance (not full MRP or recharge amount)
Service Receiver ❌ No. You are not liable under reverse charge; you are providing service to Reliance.

🔐 Do You Need to Register for Service Tax?
✔️ Yes, if your commission income exceeds ₹9 lakh per year
(as threshold for registration was ₹9 lakh, and ₹10 lakh for exemption limit at the time)

Even if you're below the ₹10 lakh limit, Reliance may require registration for compliance reasons.

🧾 What to Include in Your ST Return?
You only need to show:

Commission income (not recharge MRP or total turnover)

File ST-3 Return (half-yearly basis)

Choose Business Auxiliary Service as your taxable service category.

❌ Exemption from Service Tax?
Not available if:

You're using Reliance's brand/trademark (which you are)

You're promoting or facilitating sale of telecom service (which is taxable)

So, Notification No. 6/2005-ST (small service provider exemption) does NOT apply to branded services like this.

✅ Legal References:
Section 65(105)(zzb) – Business Auxiliary Services

Circular No. 96/7/2007-ST, dated 23.08.2007
Clarifies pre-paid distribution margins are taxable as BAS

Notification No. 6/2005-ST – Small Service Provider Exemption
(Not applicable to branded services)

✅ Final Summary:
Point Answer
Are you a Service Provider? ✔️ Yes — providing Business Auxiliary Services to Reliance
Are you a Service Receiver? ❌ No — you are not liable under reverse charge
Taxable Amount? Only your commission income
Registration needed? ✔️ Yes, if commission > ₹9 lakh/year, or if company insists
Exempt from Service Tax? ❌ No — not eligible due to brand involvement
Service Tax Return (ST-3)? ✔️ File showing only commission under BAS category

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