Double taxation barred on telecom distributor commission where service tax was already paid on the gross MRP.

Service tax was not payable separately on the commission received by a SIM card distributor where the principal telecom company had already discharged tax on the gross MRP. The commission was treated as part of the taxable value already collected from the customer, and a further levy on the distributor would amount to double taxation of the same value. Applying earlier Tribunal rulings on similar telecom distributor and agent arrangements, the separate demand was held unsustainable.

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Issues: Whether service tax was payable on commission received by a SIM card distributor where the principal telecom company had already discharged service tax on the gross MRP, and whether a separate demand on such commission was sustainable.

Analysis: The commission was paid out of the very MRP on which the principal telecom company had already discharged service tax. The decision relied on earlier Tribunal rulings holding that, in such a transaction structure, the commission element is already embedded in the taxable value collected from the customer. A further levy on the distributor's commission would amount to taxing the same value twice. The settled view was also noted that similar distributor/agent arrangements in telecom marketing had been held not to warrant a second demand where the principal had paid tax on the full value.

Conclusion: Service tax on the commission was not payable separately, and the demand was unsustainable.

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