12 January 2013
One Del credre Agent has a gross Commission of Rs.1,00,000 but his principal deducted 35,000 for non payment of customer & finally he received Rs.65,000 in hand
So my Question is as on 31/3/2012 weather Service Tax is chargeable on 1,00,000 or 65000????
12 January 2013
The service tax is to be charged on the gross value of service provided or to be provided which is the value of Rs. 1,00,000/=
However, in the instant case there is a recovery of an amount of Rs.35,000/- by the principal from the agent on his commission due to non-payment of the dues by the customer of the principal.
In my opinion it cannot be possible to term the recovery amount as reduction in the consideration payable for the service rendered rather it is a indemnification of the loss by the agent to the principal for the non payment of the customer.
Therefore the service tax has to be paid on the whole amount of Rs.1 lakh both prior and post 31-3-2012.
14 January 2013
But as a del credere agent, the commission is due to the agent only after he ensures that his services related to the payment by the customer to the principal is completed. So as per the terms of agreement, the commission is due to him only if the customer pays to the principal in time and if any default is committed by the customer, the same would be reduced from the commission payable to the agent
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