Double taxation barred on DTH distributor commission where service tax was already paid on voucher MRP.

Service tax was held not payable on commission received by DTH coupon distributors where the principal operator had already discharged tax on the full MRP of the recharge vouchers, including the distributor commission component. Levying tax again on that commission would amount to double taxation, and the same reasoning applied whether the vouchers related to SIM cards or DTH services. The transaction was also treated as revenue-neutral because any tax paid by the distributor would be available as credit to the principal operator. A subsequent exemption notification reinforced the position for the later period, so the demands could not be sustained.

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Issues: Whether service tax was payable on commission received by DTH coupon distributors when the DTH operator had already discharged service tax on the maximum retail price of the recharge vouchers, and whether the exemption for selling agents or distributors applied.

Analysis: The tax on the recharge vouchers had already been discharged by the principal operator on the full MRP, which necessarily included the distributor's commission component. Levelling service tax again on that commission would amount to double taxation. The same principle applied irrespective of whether the vouchers related to SIM cards or DTH services, and the transaction was also revenue-neutral because any tax paid by the distributor would be available as credit to the principal operator. The subsequent exemption notification reinforced the conclusion for the later period.

Conclusion: Service tax was not payable on the commission received by the distributors, and the demands could not be sustained.

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