Service tax applicability on commission received

[DEV KUMAR KOTHARI]

Amways- their dealers/ agents or franchisee are reselling goods on Amway and get profit margin as dealer woul dget depending on volumes generated by the team of any dealer. Though they show it commission, but in fact it is margin of a trader. Whether sommission / profit earned will be subject to service or not. In case they are dealer then servicetax should not be levied. any case law on this subject and current positin may be explained.

AI Summary

Service tax on commission: MLM dealer margins treated as commission, attracting service tax where remuneration is performance linked.
Payments to participants in the MLM scheme are characterized as commission because they are performance dependent and include earnings from sales by downstream agents; such receipts, not treated as ordinary dealer profit margins or as registered purchase/sale transactions, are regarded as taxable consideration for marketing/distributive services and thus fall within the scope of service tax.