Service Tax on KSFE Chitty Commission

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  1. joji luka

    joji luka New Member

    Sir,
    I have a KSFE (Kerala State Financial Enterprises) Chitty for 10,00,000. At the begining of the chitty all members are paying the whole amount ie 10 lakhs/ 100 members ie. 10,000/- each; and monthly subscription Rs 7500 after deducting the profit share of Rs 2500 (total monthly subscription is 10,000)
    In every month one chity will issue to one member for 10 lakhs; Out of this
    1. Chitty Subscriber will get 70% ie 7 lakhs Rupees
    2. 2.5 lakhs divided to 100 members ie. 2,50,000 Rupees
    3. Balance goes to KSFE commission ie. 50,000 Rupees

    The Service Tax 14% is levied on Sl No.3 (14 % of 50,000) ie. 7000; this amount is liable to pay by the chitty subscriber.
    The actual benefit receiver is KSFE.
    The chitty subscriber is receiving 30% less amount while getting the chitty.
    even the 100th member may get only 95% ie after deducting KSFE Commission.
    As KSFE is receiving the commission of the chitty who is liable to pay the service tax of the commission? is by customer or by KSFE?
     

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