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Service Tax on Commission received for High Sea Sales

This query is : Resolved 
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(Querist)
26 March 2009

Dear Sir,

In a case of High Sea Sales, when we receive commission from the manufacturer, whether it attracts service tax or not.

Example:
If A is a manufacturer in foreighn country, B is Indian Company which buys material from A and sold it to C, another Indian Company when the material is in transit. For that transaction if A pays commission to B, is B liable to pay Service Tax

Please clarify.
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CA. B.SRINIVASULU

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CA. B.SRINIVASULU (Expert)
26 March 2009
If Indian company B provides service to manufacturer A of foregin country by just identifying the person and B receives the commission in foreign commision and no bill has been raised on B for materials then service tax is not payable it will be in the nature of export of service and exempted accordingly.

If goods were billed on B and he transfers to C for a higher value then it becomes part of sale and sales tax provisions will apply and no service is involed here.
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