Service tax on discount received

no they are not  liable for service.,ST is charged on gross bill value(excluding discounts ,if any)

yes service tax is to be charged on the gross value of bill

You have to make a test:-

On Trading of Goods there is no service tax. If you have received a trade discount say of 10% or a volume discount it is effectively a reduction in purhase price. There is no activity of service. There is no declared service. The consideration is a discount and the predominant activity of yours is trading for which there is no service tax leviable. You are not providing a service or declared service for which you are receiving a discount. Receiving goods at discount for consumption will also not attract the tax.

However, if the discount is given to you for a service provided by you to the seller, it can be taken as an activity for consideration. Ditto for a declared service provided by you, i.e. if discount is given to you for an act of forbearance or negative covenant by you or even for an agreement of such act.

If you get discount for large volume there is no forbearance or negative. You are agreeing to buy a huge quantatity and that is not a service. For early payment also there is no service or declared service for which it can be a consideration.