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TMI BlogService tax on Free DeliveryX X X X Extracts X X X X X X X X Extracts X X X X ..... We are a small time ecommerce Company selling goods online. We started the business from April 2015 and for the period for Apr 2015 to Mar 2016, we have provided free delivery to all our customers. From April 2016 on wards we started charging Delivery charges separately. Since we started collecting delivery charges separately, we also started paying Service tax on the same from Apr 2016. Now the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice tax department is of the view that we have to pay Service tax from Apr 2015 on wards because we have provided that service to customers. Our view is of that since we have not collected charges from customers, we are not liable to pay. Please help if our assumption is correct, do we need to pay service tax if the service is provided at free of cost? - Reply By Himansu Sha - The Reply = Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at is the reason cited by the department? - Reply By KASTURI SETHI - The Reply = Dear Querist, Nobody provides free service. I think delivery charges were being recovered in guise. They are added to the price in a hidden way. That is why the department is asking for ST. If you want to prove, the department will not listen to because there is no free lunch . It is not ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aritable. I think so . Otherwise Service without consideration does not qualify the definition of 'Service' under the Finance Act. Free Service is out of Service Tax. - Reply By Himansu Sha - The Reply = You are correct sir. When the taxable value is not ascertainable, section 67 is applicable. One has to prove the nil consideration. There will be no tax. - Repl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y By Ganeshan Kalyani - The Reply = Additionally, if the recovery of delivery charges are only to pay to the agency carrying out delivery on behalf of you, then pure agent provision would of use to you. But then the amendment stating that reimbursement is also taxable would need to be taken care. Further, in my view, if the consideration were offered to tax under VAT then service tax provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on should not apply. - Reply By KASTURI SETHI - The Reply = Dear Sir, Issue of 'pure agent' does not come into picture here. ' C F Services is best example of pure agent. - Reply By Ramaswamy S - The Reply = The tax department is the most innovative department as they find various innovative ways to levy the tax. In this case, per se tax is not liable for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he past period as it is not collected. However, agree with Mr Sha and Mr Kasturi that it is to be proven that the price do not include the delivery charges and that the charges were borne by the company. Regards S.Ramaswamy - Reply By Ganeshan Kalyani - The Reply = If delivery activity is carried out by the company itself then pure agent concept would not apply. If any third party is assigne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the work of delivery of item then , in my view, pure agent provision would apply. Further the pricing structure need to be checked whether delivery charges were inbuilt in the price or not. If not then no service tax as there is no consideration as rightly said by Sri Kasturi Sir. Thanks. - Service tax on Free Delivery - Query Started By: - Suresh Kumar Dated:- 21-3-2017 Service Tax - Got 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Replies - Service Tax - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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