Service tax on Business Auxillary Service.

[MANASH MUKHERJEE]

Dear Sir,

A party "X" is providing service to another party B by selling the goods of B. Party X receives commission from B and pays Service tax on the commission received under the category of ' Business Auxillary Service". Now subsequently, it is found that party B also provides transportation service to party B for bringing goods from the go-down of B to the go-down of X.The party X also receives commission against carriage contract.However, no service tax is paid by X against commission received on carriage contract. Does the portion of the commission received against carriage contract falls under reverse charge mechanism. The party X is registered under BAS only.

[Ganeshan Kalyani]

Sri Manash ji,It seems that X is in order to the goods delivered at his godown fron B's place arranges for freight. He does not provide GTA service to B but in fact he would be getting reimbursed from B (assumption). In addition to it X also gets some commission for doing so. I assume that the freight arranged so integrated to the main service of selling goods of B and hence the commission paid. Therefore in my view the commission received toward freight should also be added to Business Auxiliary Service and should be offered for tax. This is my view. Thanks.

[KASTURI SETHI]

SH.MANASH MUKHERJEE JI,

Service Tax is required to be paid on the amount of freight. Agreed with Sh.Ganeshan Kalyani, Sir.

[Ganeshan Kalyani]

Thanks Sri Kasturi Sir for validating my views. Thanks.

AI Summary

Business Auxiliary Service: freight-related commission is taxable as part of BAS and must be included in taxable value.
The freight-related commission received by X for arranging carriage in connection with selling B's goods is integrated with the principal sales service and should be included in the taxable value under Business Auxiliary Service, with service tax payable by the provider rather than being treated separately under a reverse charge mechanism.