Consignment Agent

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ANIL SURANA (Querist)

17 August 2009 One of my client is a Consignment Agent of a Manufacturer. His source of income is the Commission given by principal, on which he pays Service Tax.
Also the principal gives special discount to be passed on to buyers, but Agent does so partially. He treats the difference as his income. Pls guide me as to the nature of such income and whether service tax is leviable on such differential income? Thanx in advance

Madhukar N Hiregange

Madhukar N Hiregange (Expert)

17 August 2009 The agent has to normally pass on the entire discount to the parties. Therefore it is possible for revenue to argue that the commission is inclusive of the margin.

ANIL SURANA

ANIL SURANA (Querist)

18 August 2009 MR. MADHUKAR, THANKS FOR THE REPLY. BUT YOU HAVE NOT CLARIFIED ABOUT THE SERVICE TAX PART AND WHETHER SUCH DISCOUNT NOT PASSED ON WILL BE TREATED AS COMMISSION INCOME..?? BCOZ FOR THE IT PURPOSE, IT IS TAKEN AS INCOME.

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