2012 (7) TMI 30 - AT - Service Tax

Cenvat credit - services of the commission agent - services under the category of Business Auxiliary Services Held that - Even after the activities related to business, stand deleted from the definition of inputs credit as per the Board s Circular No. 943/4/2011-C.X., dated 29-4-2011, the Service tax paid on commission on agent services would be available - period involved in the present case is prior to the amendment to the definition of input services In favor of assessee

Summary

Issues involved:
Whether service tax paid on commission agent services is available as Cenvat credit to the appellants.

Analysis:

Issue 1: Availability of Cenvat credit on commission agent services
The appellants, engaged in sugar manufacturing, availed the services of a commission agent for selling their final product and paid service tax under Business Auxiliary Services. The dispute arose when the Revenue contended that commission agent services were not eligible for Cenvat credit. The lower authorities held that post-manufacturing and post-clearance activities did not qualify as input services. However, the appellants argued that commission agent services were received before goods clearance, directly impacting their business activities. Various Tribunal decisions supported the view that such activities had a nexus with the business and should be treated as input services. The Commissioner (Appeals) acknowledged conflicting Tribunal decisions but relied on a specific case to deny Cenvat credit.

Issue 2: Interpretation of Tribunal decisions
The judgment highlighted conflicting Tribunal decisions on the eligibility of commission agent services for Cenvat credit. The case of Bhilai Auxiliary Industries deemed such services eligible, while Chemplast Sanmar Ltd. held the opposite view. The judgment noted that the Bhilai Auxiliary Industries decision predated Chemplast Sanmar Ltd. and referred to other cases supporting the eligibility of Cenvat credit for commission agent services. The judgment emphasized that certain Tribunal decisions, like Lanco Industries Ltd. and Cadila Healthcare Ltd., affirmed the admissibility of Cenvat credit for service tax paid on commission agent services. Additionally, a Board Circular clarified that even after an amendment to the definition of input services, credit for service tax on sales promotion activities and commission-based sales of dutiable goods remained admissible.

Conclusion
The judgment concluded that the impugned orders denying Cenvat credit for service tax on commission agent services were not sustainable. Relying on precedent decisions and the Board's Circular, the judgment allowed the appeal, setting aside the impugned orders and granting consequential relief. The stay petition and appeal were disposed of accordingly.