SERVICE TAX ON INCENTIVES

[JOSHIL JAIN]

Dear Sir,

 

One of my clinent is getting  incentives on sales of Car such as Target incentives, Annual Incentives, Balance Score Card ( after annual evaluation) and Cash Back Scheme ( discount offered to customers and getting back from company) . Besides sales of car it also runs workshop and getting labour charges which is taxable service. Please advise whether all the incentives mentioned above are taxable or not after introudction of Negative List.

Thanks and best regards

AI Summary

Service tax on dealer incentives: contested classification as Business Auxiliary Services versus trade discount treatment.
Whether incentives paid by a manufacturer to a vehicle dealer attract service tax under the Negative List regime is contested. Revenue treats such receipts as consideration for Business Auxiliary Services and taxable, while contrary arguments view them as trade discounts or principal-to-principal adjustments. Tribunal decisions excluding similar incentives are cited, and the issue is described as fact-sensitive and highly disputable.