GST over direct selling distributors

[nalin shah]

Sir,

Kindly clarify registration liability under GST for direct selling distributors.

The exemption limit of 20/10 lakhs applicable not?

HSN code for the service provided.

For your information, s/he do not sell any goods of the company but get facilitation fees on sells made by persons introduced by him to multilayer marketing companies like Modicare, Amway, Tupperware etc.

Thanks in advance.

[KASTURI SETHI]

Dear Querist,

Query-wise reply is as under:-

1. Yes. Threshold exemption available.

2. 998599 (Other business support services nowhere else classified).

Facilitation fee is another name for commission. In pre-GST era, it was covered under B.A.S. In support Case laws pertaining to pre-GST era are appended below:-

2013 (31) S.T.R. 701 (Tri. - Del.) = 2014 (1) TMI 307 - CESTAT NEW DELHI RAJASTHAN TOURISM DEV. CORPORATION LTD. Versus COMMR. OF C. EX., JAIPUR

2017 (47) S.T.R. 172 (Tri. - Chan.) = 2016 (9) TMI 588 - CESTAT CHANDIGARH SUKHMANI SOCIETY FOR CITIZEN SERVICES Versus C.C.E. & S.T., CHANDIGARH

2017 (52) S.T.R. 299 (Tri. - Mumbai) = 2016 (12) TMI 541 - CESTAT MUMBAI TOYOTA LAKOZY AUTO PVT. LTD. Versus C.S.T., C. EX., MUMBAI-II & V

[nalin shah]

Thanks a lot Kasturi sir. It really clarifies the query.

[DR.MARIAPPAN GOVINDARAJAN]

It is really a commission and subject to the provisions of GST.

[nalin shah]

Thanks DR.MARIAPPAN GOVINDARAJAN Sir,

The intermediates getting commission (who do not participate directly in transaction) get commission for the services because of downside trades, The main query is whether sec. 24 (vii) CGST act applicable over them or not?

As per the referred HNS code it does not apply.

Please enlighten.

Thanks

AI Summary

Registration threshold under GST applies to direct selling distributors; facilitation fees treated as taxable commission.
Facilitation fees paid to direct selling distributors are treated as commission for services and are taxable under GST; the adviser identifies HSN 998599 (Other business support services nowhere else classified) as the applicable classification. A threshold exemption for registration is available to such distributors, and pre-GST case law on similar commission receipts is cited. The question whether section 24(vii) of the CGST Act applies to these intermediaries is raised but not conclusively resolved in the discussion.