Scope of service tax

The basic principle for service tax is that when any activity is carried out by one party and in turn he is entitled for a consideration then it is considered as service. Now you need to test the transaction on this litmus paper. Hope it will help you.

The discounts allowed on trading of goods will not attract service tax.  If you are receiving any overriding commission for the orders placed on a percentage basis thro an agreement, such additional income will attract service tax.  In other words, normal discounts or annual rebate on lifting basis on purchase and sale  will not attract service tax.

thks ajit. but the question arises here is that the allocation of expenses towards lifting of material by parent company to subsidiary company & correspondingly debit notes raised to group company in subsidiary companies books & payment thereof does not include any activity. since the scope of ST has widened will it be in the ambit of service tax

thks RK for the response. but the things is that discount is being given to the customer for sale of products from parent & holding co. the discount is being accounted by group company which is then allocated to susbdiary co. does atht involve service tax 

If the company concerned is not doing any activity and there is only the allocation of expenditure that to for the purpose of sharing the expenditure then the question of service tax does not arise. Please make it clear that in order to be classified as a service, there must be something done for the service receiver against a consideration. when nothing is done that means there is no activity. Hence, no service tax.

actually i am of the same opinion but there are different views in my company. kindly narrate any section if relevant 

You can refer to clause 44 of section 65B of the Finance Act.