22 August 2013
The assessee is engaged in Business of trading yarn. It also engages in Consignment sales wherein it receives 1.5% of value of sales as commission. However, it bifurcates the commission into two parts-one being commission and other as cash discount (50% each) The purpose for doing so is to avoid crossing service tax threshold limit.It is not registered under any service category at present. My query is what is the category of service for such consignment sales made through Principle-agent relationship?
22 August 2013
An agent can not receive any cash discount. The design of the transaction is not correct and legal. The amount received by agent in whatever name it is called, is nothing but commission except the reimbursements.
The service could be said to be a Business Auxiliary service
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