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service tax on incentive received for early completion of work

Service Tax - Started By: - RAM AVTAR - Dated:- 26-12-2015 Last Replied Date:- 9-1-2016 - whether compensation received on early completion of work is taxable under service tax and vat . if yes then service tax will calculation considering original work or not - Reply By KASTURI SETHI - The Reply = As per Section 67 (3), Service Tax is applicable on the amount of incentive or compensation. Note the language, 'Any amount.......' Also see the definition of the term 'Consideration'. .....

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e the query is resolved. - Reply By PARTHASARATHY V - The Reply = A very good judgement by CESTAT Bangalore which is squarely cover your quarries which is pasted bellow: While executing the work or issuing the order it is not ascertained that the work can be completed prior to the stipulated time. The incentive aspects is coming only after completion of work. Suppose as some other expert stated, if the work is delayed there is LD clause for recovering money form the contract, is there any compen .....

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In fact the said incentives were not even known at the time of performance of the service and are always calculated subsequent to the completion of the service. As such it can be safely concluded that the same is more in the nature of a prize money for a good performance by the appellant and are in no way linked to the value of the services. As such we find no justification for including the same in the value of the services and to confirm service tax on the same. - Demand set aside - Decided i .....

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