ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 10.06.2025
CESTAT Ahmedabad Trade Discounts Are Not Taxable Services
The CESTAT Ahmedabad bench allowed the appeal of M/s Akshita Exports, setting aside a demand of over โน32 lakhs in service tax, interest, and penalties.
The case revolved around the deduction of foreign commission in export invoices, which the Department alleged was taxable under Business Auxiliary Services (Section 65(105)(zzb) of the Finance Act, 1994). However, the Tribunal ruled that no such tax was applicable since there was no contract or payment made to any foreign commission agent by the appellant.
Background of the Dispute
- Akshita Exports exported goods between 2008โ2009 and 2011โ2012, with export invoices reflecting commission amounts deducted from the gross value.
- The foreign buyers paid the net invoice amount after deducting these commissions.
- The Department claimed the deductions constituted consideration for services rendered by foreign agents, thereby attracting service tax under reverse charge.
- The appellant contended that no foreign agent was engaged or paid directly, and the deductions were standard trade discounts to buyers.
This Article has been written by Shri Ravi Shekhar Jha, Advocate Delhi High Court based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.
Source: CESTAT Ahmedabad
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