Other Income.

[Asked by 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

Service tax on compensation for non lifting of goods may arise as consideration for agreeing to refrain or tolerate acts.
The issue is whether contractual compensation for non lifting of goods is chargeable to excise or service tax. One view holds no excise liability where there is no removal and that the receipt is not a taxable service. Another view contends that such compensation may constitute consideration for agreeing to refrain, tolerate, or perform an act and therefore could attract service tax under the expanded service definition.