Credit and service tax

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

17 March 2014 credit notes issued against the purchases made by the dealer form the company as a loyalty bonus, quarterly incentives, annual incentives, and discounts. It will be accounted as an indirect income in the books. will it be liable for service tax. if yes on what basis.
Note:-
It is an income generated for achieving the target of purchase by a dealer form their distributors. it can be reversed in the next quarter if not paid for their dues or reduction in the target achievement.

Rajagopalakrishnan R

Rajagopalakrishnan R (Expert)
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17 March 2014 Any income received based on the turnover or sale of goods will not be exigible for service tax, as there is no service rendered as consideration for the same. I am assuming in your case the discounts/incentive etc. are given by your principals for achieving specific volume based targets monthly/quarterly etc. These amounts definitely cannot be charged to service tax as there is no service involved but only sale of goods. This view has been held in a number of decisions of the CESTAT. The Bangalore bench of CESTAT in Popular vehicles and Services Ltd vs.CCE reported in 2010 TaxPub(ST)0118, 2010 018 STR 493 held that such income cannot be charged to service tax

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