2024 (7) TMI 1570 - AT - Service Tax

Levy of service tax - Business Auxiliary Service - incentive received by the appellant on account of early payment - HELD THAT - This issue is no longer res-integra as in respect of identically placed delcredere agent in the case of M/S. TRADEX POLYMERS PVT LTD VERSUS COMMISSIONER OF SERVICE TAX AHMEDABAD 2011 (12) TMI 398 - CESTAT AHMEDABAD this Tribunal has held that The discounts/incentives received by the assessee from the print media will not be liable for service tax under the category of advertising agency services. Thus in view of the said judgments the issue is no longer res-integra - the impugned order is set aside - appeal allowed.

Summary

Issues:
Whether the discount earned by the appellant as a del-credere agent is liable to service tax under "Business Auxiliary Service" as commission.

Analysis:
The case involved the appellant, a del-credere agent of a company, registered under "Business Auxiliary Service," who earned discounts as an incentive for early payments made by customers. The appellant passed on these discounts to customers who made early payments, while recovering interest from customers who paid beyond the credit period. The department contended that the incentives received by the appellant were liable to service tax as commission under "Business Auxiliary Service."

The appellant argued that the discounts earned were trade discounts and not commission exigible to service tax. The appellant cited previous judgments involving similar del-credere agents of the same company where demands for service tax were set aside. The Tribunal reviewed the submissions and records and found that the discounts earned by the appellant were trade discounts for early payments to the principal company, not commission under "Business Auxiliary Service."

Referring to a specific case involving a distributor and commission retention for early payment incentives, the Tribunal emphasized that early payment incentives retained by the appellant were discounts, not a taxable service. The Tribunal cited previous judgments to support the decision that discounts or incentives received by the appellant were not liable for service tax under "Business Auxiliary Service."

Based on the precedent set by previous judgments, the Tribunal set aside the impugned orders and allowed the appeals, concluding that the discounts earned by the appellant were not subject to service tax under "Business Auxiliary Service." The Tribunal's decision aligned with the interpretation that discounts or incentives received were not charges for services but rather discounts related to specific business transactions.

In light of the consistent rulings in similar cases, the Tribunal held that the issue was no longer res-integra and decided in favor of the appellant, setting aside the demands for service tax on the discounts earned. The judgment was pronounced in open court on a specified date.