06 January 2014
You have not clarified whether the commission is paid to salesperson on the rolls of the company or to independent dealers / vendors.
In the former case, the payment of sales commission is just payment of salary as held by Supreme Court almost 40 years back. When ever salary is paid as remuneration, a relationship of employer-employee arises and the employer does not provide any service as defined in the Finance Act 1994 as amended.
In the latter case the dealer/ vendor renders Business Support Service to the company and they are liable to collect service tax from the company and remit it to the Government Treasury. the company is eligible for CENVAT Input Credit.
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