Service Tax on Selling Commission

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Biju P (Querist)
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11 July 2009 Sir,

I am working in a Kerala based PSU having branches all over the Kerela.It is enagaged in the business of productions and manufacturing of electronics goods as well as software products.The company also have a five subsidiary units,fully incorporated as company under the Indian Companies Act,1956.The Holding Company's productions as well as proudctions of subsidiary units are selling through the marketing offices of Holding Company,w hich have various offices all over India.Holding Company have eneterd in an agreement with the subsidiary company realating to the selling of products of subsidairiy units.Subsidiary company is required to pay a commission of 5% on the net sales effected by the marketing offices.My question is whether the commission received by the Holding company is laible for services Tax?Monthly expenses on behalf of some of the marketing offices is incurred by the said subsidiary unit which will be adjusted with the above commssion at end of the each quarter.Based on the above circumstances what is time limit for charging/paying the service tax liablity?

Rajesh Kumar

Rajesh Kumar (Expert)
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12 July 2009 Service Tax is payable on 5% commission amount. It is immaterial how it is paid, so no benefit for adjustment.

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