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2023 (10) TMI 997 - CESTAT KOLKATANature of Activity - Payment of 'Address Commission' against 'Chartering of Ships' - Business Auxiliary Service (BAS) or Discount - Amount paid to foreign companies as per Section 66A of the Finance Act. The argument of the Department is that the discounts from the Hire Charges were allowed by the Appellant only to promote their business and therefore, it should be treated as a ‘commission’ and leviable to service tax under the category of ‘Business Auxiliary Service’ (BAS). HELD THAT:- It is observed that in chartering business as a normal trade practice, the charterer is allowed a discount from the hire charges payable by them and the net hire charges is received by the ship owner. Thus, for all practical purposes, the charter is given a discount by the owner on the hire charges and no remittance is being made by owner of the ship i.e. ASL to charters. As the Address Commission was not paid towards rendering of any taxable service, no service tax is payable on “Address Commission” as the same is in the nature of discount and not a payment for provision of any taxable service. It is a settled principle of law that service tax is leviable only on consideration received for provision of service. When there is no evidence to substantiate the allegation that the discount was offered towards rendering of any service, no service tax is payable on those discounts - the demand is not sustainable and set aside the same. As the demand itself is not sustainable, the question of charging interest or imposing penalty does not arise. Appeal allowed.
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