2018 (2) TMI 940 - AT - Service Tax

CENVAT credit - Commission agent services - common inputs and input services which are used to utilise for trading activity - Held that - in respect of service tax paid on Commission Agent Services, appellant is not eligible to avail cenvat credit - any commission paid for procurement of business cannot be considered is in relation to business activity and hence held to be ineligible - credit not allowed. CENVAT credit - trading activity being exempted services - Held that - Since the issue is settled that trading activity is an exempted service, appellant needs to follow the rule 6(3A) of Cenvat Credit Rules, 2004 and reverse the cenvat credit availed on trading activity - matter needs verification of the reversal done is in accordance with the law or otherwise. Decided partly against appellant and part matter on remand.

Summary

Issues: Denial of cenvat credit on commission agent services and ineligible cenvat credit availed for trading activity.

In this case, the appellant appealed against Order-in-Original No.49/2012-Adjn. (ST), dated 31.12.2012, concerning the denial of cenvat credit on commission agent services and ineligible cenvat credit availed for trading activity. The appellant paid commission to individuals for procuring Annual Maintenance Contracts for X-Ray machines and availed cenvat credit, which the department contested. The Adjudicating authority confirmed the demands raised, stating that the appellant is ineligible for such credits and must reverse an amount equivalent to 10% of the purchase value for not maintaining separate accounts. The appellant argued that the commission was for specific activities and not trading, and trading activity during the period was not exempted. The Commissioner/AR contended that the commission paid was not eligible for cenvat credit, citing relevant High Court judgments.

Regarding the commission agent services, the Tribunal upheld the demand, citing the judgment of the High Court of Gujarat, which held that commission for procurement of business is ineligible for cenvat credit. The penalty imposed on the appellant was set aside pending a decision by the High Court. On the issue of trading activity, the Tribunal noted the High Court judgments holding trading as an exempted service and ruled in favor of the appellant. The matter was remitted to the adjudicating authority for verification of the reversal of cenvat credit on trading activity. The appellant was directed to provide evidence of the reversal for consideration. The Tribunal disposed of the appeal, allowing the appellant to lead further evidence on the matter.