2026-VIL-1011-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Distinction between Commission Agent and Trader – Appellant is a non-profit organization registered as a society claims to have purchased goods at 14% discount from registered sellers and sold them at 13% discount to registered buyers, retaining 1% margin - Revenue treated this 1% gain as commission income and demanded service tax thereon - Whether the margin retained by the appellant on purchase and sale of goods constitutes commission income liable to service tax or whether it represents trading profit and trade discount – HELD - The commission agents and buyers are two different categories of persons. A commission agent acts on behalf of a principal, finds and connects buyers with sellers, and receives commission for services rendered without acquiring title to goods or making payment for them. In contrast, a buyer purchases goods on its own account, acquires title, and makes payment - Trade discount is the discount which a trader receives from the sale price when buying in bulk, whereas commission is a fee for facilitation services - The appellant, being a non-profit society with fixed registered sellers and buyers, operated on a minimal margin without conducting extensive marketing. The mere fact that the appellant operated on a small margin of 1% or had fixed registered sellers and buyers does not transform it into a commission agent – Further, when the so-called commission income is deducted, the total value of taxable services in every relevant year falls below the threshold which was exempted from service tax under the applicable notification. Therefore, the demand of service tax on the commission income cannot be sustained - The impugned order is set aside and the appeal is allowed
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