2012 (6) TMI 21 - AT - Service Tax

BAS - whether the Respondent availing the services of commission agents, are eligible for taking credit of the service tax paid by the commission agents on the commission received by them Held that - in the case of Bhillai Auxiliary Industries (2008 (12) TMI 134 - CESTAT NEW DELHI - Service Tax) , service of commission agents received by a manufacturer is an input service eligible for Cenvat credit, Revenue s appeal is dismissed

Summary

Issues:
Interpretation of the definition of input service under Rule 2(l) of the Cenvat Credit Rules, 2004 regarding services of commission agents and availability of Cenvat credit.

Analysis:
The appeal before the Appellate Tribunal CESTAT, New Delhi involved a dispute regarding whether the services of a commission agent received by the respondent fell within the definition of input service as per Rule 2(l) of the Cenvat Credit Rules, 2004, and if the Cenvat credit of service tax paid on these services was available to the respondent. The Assistant Commissioner had initially confirmed a Cenvat credit demand against the respondent, which was later overturned by the Commissioner (Appeals), leading to the Revenue filing the present appeal.

The Departmental Representative argued that services received after the sale of goods are not covered by the definition of input service, citing a judgment of the Punjab & Haryana High Court. On the other hand, the respondent's Counsel contended that the activity of commission agents falls under sales promotion, which is covered by the definition of input service. The Counsel also referred to various tribunal judgments supporting the eligibility of commission agent services as input services.

After hearing both sides and examining the submissions and records, the Tribunal concluded that the service provided by the commission agent to procure sales orders was akin to sales promotion and an essential business activity for the manufacturer. The Tribunal referenced a judgment of the Bombay High Court to support the interpretation that activities integral to the business of manufacture, including those before or after the manufacturing process, are covered under the definition of input service. The Tribunal distinguished the cited judgment of the Punjab & Haryana High Court related to outward transportation services, emphasizing that it did not apply to the present case.

Based on the precedents and the inclusive nature of the definition of input service, the Tribunal dismissed the Revenue's appeal, affirming that the service of commission agents received by the respondent qualified as an input service eligible for Cenvat credit.