Other Income.

[Guest]

Sir, 

During checking of balance sheet  it came to notice that the unit has received Rs. 2 Crores as income   for non lifting of material by their customer.On questioning the concerned person explained that  they had received  order for supply of goods but due to non lifting by them they  were charged Rs. 2 Crores which they have paid as per terms of contract.

Kindly let me know whether this income is to be treated as income from manufacture and Ex.Duty is payable  or  it should be treated as  commission income and  chargeable to service  tax /or under which head of service tax it should fall in case it is income chargeable to service tax.VERY URGENT.

P.M.Dongre

AI Summary

Debate on Rs. 2 Crores Compensation: Manufacturing Income for Excise Duty or Commission Income for Service Tax? A discussion was initiated regarding the classification of Rs. 2 Crores received as compensation for a customer's non-lifting of material. The inquiry sought to determine if this income should be treated as manufacturing income subject to excise duty or as commission income liable for service tax. One participant argued that such compensation is not related to service under the Finance Act, 1944, thus not subject to excise or service tax. Another participant contended that since July 2012, such non-operating income is subject to service tax, citing the Service Tax Educational Guide's provisions on tolerating acts for consideration.