CESTAT adjudicated a service tax dispute involving a first-line ...

Distributor's Commission Deemed Taxable Business Auxiliary Service Under Performance-Linked Compensation Rules

May 16, 2025

Case Laws     Service Tax     AT

CESTAT adjudicated a service tax dispute involving a first-line distributor's commission from a product company. The tribunal determined that the distributor's commission for identifying and sponsoring second-level distributors constitutes Business Auxiliary Service, rendering the commission taxable. Despite the distributor's claim of no profit margin, the tribunal found evidence of performance-linked commission. The tribunal invoked extended limitation period, concluding the non-payment of service tax represented deliberate duty evasion. The appellant failed to substantiate alternative claims, and the original tax demand was upheld. The appeal was consequently dismissed, confirming the service tax liability on the distributor's commission.

View Source