Service Tax can’t be levied on Remuneration for Sales Promotion as it was already subject to Income Tax: CESTAT [Read Order]

The Customs Excise and Service Tax Appellate Tribunal (CESTAT) of Allahabad set aside the ruling of lower Tribunal and held that if the entire remuneration stands considered by Income Tax Authorities as salary, the same cannot be considered as service, so as pay the service tax.

The Tribunal is comprising of Judicial Member Archana Wadhwa and Technical Member Anil G Shakkarar rendered an Order on an appeal given by M/s Vectus Industries Ltd.

Commission earned by the Managing Director of the appellant company, apart from his fixed salary, is in lieu of services provided by him for promotion of the sales in the market and hence is liable to service tax. The lower authorities have held that the same is a service.

The lower authorities have held that the same is a service and accordingly, service tax to the tune of Rs.19,99,807/- stands confirmed against them for the period from 2012-13 to 2013-14 by raising a show-cause notice on 03.11.2016. The demand confirmed by the Original Adjudicating Authority stands upheld by Commissioner (Appeals) along with upholding the imposition of penalties.

While setting aside and impugned order Tribunal observes that the entire remuneration stands considered by Income Tax Authorities as salary, the same cannot be considered as service, so as pay the service tax and remand the matter to the Original Adjudicating Authority for fresh consideration.