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of <h1>Appellate tribunal rules early payment incentives not taxable as Service Tax under Business Auxiliary Services.</h1> The appellate tribunal ruled in favor of the appellants, stating that early payment incentives retained by distributors are not taxable as Service Tax ... Whether discounts/incentives given to the appellant as an advertising agency receive from the print media would be liable for the service tax under the business auxiliary services – Held that:- The discounts/incentives received by the assessee from the print media will not be liable for service tax under the category of advertising agency services - if the said discounts/incentives itself cannot be considered for the purpose of taxability under the head business auxiliary services as the amounts which are received are in respect of the services provided under the category of advertising agency services and the amount are discounts and incentives and not as charges for services – decided in P. Gautam & Co. Vs CST [2011 (9) TMI 392 - CESTAT, AHMEDABAD] – in favour of assessee. Issues:1. Whether early payment incentives retained by the appellants are taxable as Service Tax under Business Auxiliary Services.Analysis:The appellate tribunal, after hearing both sides, decided to dispose of the appeal based on a previous decision. The appellants, acting as distributors, received commission from principals and retained an amount as early payment incentive when collecting amounts due to the principal. The revenue authorities argued that the incentive is taxable as it should be passed on to the purchaser. However, the tribunal disagreed, stating that the incentive is a discount and not a taxable service. Referring to a previous case, the tribunal highlighted that any incentive or cash discount given will not be covered for Service Tax liability under Business Auxiliary Services. The tribunal set aside the impugned order and allowed the appeal.This judgment clarifies the treatment of early payment incentives retained by distributors under the category of Business Auxiliary Services. It emphasizes that such incentives are discounts and not taxable services, aligning with previous tribunal decisions. The tribunal's analysis focused on distinguishing between incentives and taxable services, ultimately ruling in favor of the appellants based on the precedent set by earlier cases.
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