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TMI Blog2023 (11) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, are not levaible to service tax under section 67 of the Finance Act. Following the above decision of the Larger Bench it is held that the impugned Order-In-Appeal is without any merit and therefore, set aside - appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether Incentives paid for achieving targets are taxable? "72. The contention advanced by learned counsel of the interveners is that incentives cannot be construed as "consideration" and if it is so no service tax can be levied on this amount because under section 67 of the Finance Act, service tax is leviable on "consideration", which is the gross amount charged by the service provider for rendering a particular taxable service. 73. It would, therefore, be appropriate to examine the scope of the term "Incentives Incentives are generally given to encourage performance of a party. The factual position described above, reveals that incentives have been paid by the airlines or CRS Companies to travel agents when t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of service and any other amount which is not a consideration for provision of service cannot be subjected to service tax 76. In this connection, it would be appropriate to refer to the decision of the Supreme Court in Union of India vs. Intercontinental Consultancy and Technocrats 2018 (10) G.S.T.L 401 (S.C) 2018-TIOL-76-SC-ST. The Supreme Court observed that service tax is on the value of taxable services and, therefore, it is the value of the services which are actually rendered which has to be ascertained for the purpose of calculating the service tax. It is for this reason that the expression "such occurring in section 67 of the Act assumes importance. The Supreme Court, therefore, observed that the authority has to find wha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arget incentive" payments are concerned, Ford agreed with its dealers to pay certain sums of money to dealers which achieved monthly and quarterly sales targets that Ford set based on the dealer's size and past performance Targets were based on the number of cars sold to eligible customers in the qualifying period, not the value of the cars sold. Once a car was sold and delivered to an eligible customer the details would be entered into the vehicle information system and, in about the middle of the following month, based on the information so entered Ford would issue the dealer with a tax invoice for the incentive payment plus 10% GST and shortly thereafter pay that amount to the dealer. 30. The Tribunal reached a different vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... centives intended to encourage the overall relationship to operate efficiently as involving supplies for consideration equally unpersuasive. A dealer will always wish to sell as many cars as practicable and to move old stock to make way for new stock. So too a dealer will always wish its ordering arrangements to be the most efficient and economically beneficial to it. The manufacture will have the same objectives. It is this context which underpins the Tribunal's conclusion that the payments are not for the supply of anything by the dealer. As the Tribunal said at [86] the dealer (which must be inferred to act in an economically rational manner in the ordinary course) will always want to run the business in this way. The fact that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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