Sales incentives under a principal-to-principal dealership were held outside Business Auxiliary Service, defeating the service tax demand.

Sales incentives received under a principal-to-principal dealership arrangement for achieving sales targets were held not to constitute consideration for Business Auxiliary Service. The tribunal noted that the incentives were linked to sales promotion in the dealer-manufacturer relationship and were already covered by prior decisions treating such receipts as outside the scope of taxable service. On that basis, the service tax demand was unsustainable, the impugned orders were set aside, and the appeals were allowed with consequential relief.

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Issues: Whether sales incentives received by the appellant from the manufacturer for achieving sales targets were taxable as consideration for Business Auxiliary Service.

Analysis: The dealership arrangement was on a principal-to-principal basis, and the incentives were linked to sales promotion undertaken in the course of the dealer-manufacturer business relationship. The issue was already covered by prior tribunal decisions holding that such incentives do not constitute consideration for any taxable service and cannot be brought under Business Auxiliary Service.

Conclusion: The incentives were not taxable as Business Auxiliary Service, and the service tax demand could not be sustained. The impugned orders were set aside and the appeals were allowed with consequential relief.

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