Service tax on prepaid card or recharge distributors

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 May 2011 It has been clarified in the TRU letter bearing D.O.F. No.: 334/3/2011-TRU dated 28-02-2011 that in case of service provided by way of Recharge Coupons or Pre paid cards or the like, the value shall be the Gross Amount charged from the subscriber or ultimate user of the servce and not on the amount paid by the distributors to the mobile operators.
E.G. If XYZ Mobile operators gives a recharge coupon of Rs. 100 to its distributor @ Rs. 95/-. The said Distibutor sells it to customers for Rs. 100/-. Thus the value of telecommunication service will be Rs. 100/- and not 95/-.
Now in the light of this letter, Is the Distribuotr liable to pay service tax on his commision of Rs.5/- under the head of Business Auxiliary Services.??
When the total Rs. 100/- has been charged to service tax, is separatel levy on distributors on his commiison will lead to Cascading effect and double taxation?//
Kindly guide on the issue.

U S Sharma

U S Sharma (Expert)
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15 May 2011 distributor is now out of this net, he dont have to pay service tax, as the entire service tax liability goes to service provider.

Rs 5/0 diff is the business profit of distributor, and its not the services.

pre paid card distributors now surrender their service tax registration number, coz its of no use as on now after budget 2011

Querist : Anonymous

Querist : Anonymous (Querist)

16 May 2011 Thanks a lot Sharmaji.

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