Wednesday, July 20, 2016

Prize money paid to service provider for good performance isn't liable to service tax

a. Assessee was a registered service provider under the category of ‘site formation and clearance and excavation services’. It was discharging its service tax liability on basis of bills raised and amount paid by the service recipient.
b. One service recipient provided specific quantities of explosives and diesel oils for rendering services. There was agreement that if assessee used quantity of explosives and diesels below agreed quantity, it would be paid bonus/incentive by the service recipient.
c. Revenue contended that explosives and diesel oils which were provided free of cost and amount of bonus paid in shape of incentives would form part of assessable value of services. Assessee did not pay service tax on aforesaid amount and a show cause notice was issued to it.