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Is performance exgratia paid to service provider liable to service tax

Venkatesh (Student) (9 Points)

09 January 2017

Management or Business Consultancy Service Provider received certain amount as performance exgratia from service receiver. is that amount also liable to service tax?

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (182044 Points)
Replied 09 January 2017

No.

Refer: AMR India Ltd. v. CCE & ST – (2016) 42 STR 329 (Tri. – Bang.)

The Tribunal held that the free supply of items provided by service recipient of site formation service could not be added to assessable value of service to levy service tax. It further held that the bonus given to the assessee by service recipient for efficient use of diesel and explosives could not be added to value of service as the same was not known at time of performance of service and was calculated subsequent to completion of service and it was more in nature of prize money for good performance and in no way linked to value of services.