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May 2012

Mutual fund distribution — Liability to pay service tax on commission — As per Service Tax Rules, 1994 such liability was on recipient of services i.e., mutual fund company — If they did not pay it, liability was not transferred to mutual fund distributor.

By Puloma Dalal
Jayesh Gogri
Chartered Accountants
Reading Time 1 mins
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(2012) 25 STR 481 (Tri-Del.) — Raj Ratan Castings Pvt. Ltd v. Commissioner of Customs & Central Excise, Kanpur.

Mutual fund distribution — Liability to pay service tax on commission — As per Service Tax Rules, 1994 such liability was on recipient of services i.e., mutual fund company — If they did not pay it, liability was not transferred to mutual fund distributor.


Facts:

The appellant was a distributor of mutual fund units who received commission from mutual fund companies or asset management companies. The commission received by the appellant from the said companies, was taxed by the authorities on the ground that it provided Business Auxiliary Services to the mutual fund company.

Held:

It was held that the liability to pay tax is of the service recipient i.e., the mutual fund company. If it was not paid by the company, proceedings have to be started against the company and the liability will not transfer to the mutual fund distributor.

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