Service tax on Free Delivery

[Suresh Kumar]

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 Service 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?

AI Summary

E-commerce Firm Challenges Service Tax on Free Deliveries; Debates on 'Pure Agent' Provisions and VAT Arise An e-commerce company provided free delivery from April 2015 to March 2016 and began charging delivery fees from April 2016, subsequently paying service tax on those fees. The tax department claims service tax is owed from April 2015, arguing that services were provided. The company contends that no tax is due for free services. Responses suggest proving no hidden delivery charges were included in product prices and discuss the applicability of 'pure agent' provisions and VAT considerations. The consensus is that service tax is not applicable if the service was genuinely free without hidden charges.