2018 (6) TMI 6 - AT - Central Excise

Cenvatable services - Services of Sales Commission Agents - input services or not? - whether the services of Sales Commission Agents can be held to be cenvatable and the Service Tax paid on the same is available as a credit to the assessee? - Time limitation - Held that - There is no stay of operation of various decisions of the Tribunal, which are in favour of the assessee and which stand referred to by Commissioner (Appeals). Infact nothing has been brought on record to show that said decision of the Tribunal wherein the judgment of Hon ble High Court of Gujarat in the case of Cadila Healthcare Ltd. 2013 (1) TMI 304 - GUJARAT HIGH COURT was considered, stand appealed against by them. In that case, the issue is fully covered in favour of the assessee. Period of limitation - no suppression of facts - extended period of limitation - Held that - Demand is time barred inasmuch as the period involved is April, 2013 to February, 2016 whereas the show cause notice was issued on 10.08.2016 - Inasmuch as during the relevant period, all the decisions were in favor of the assessee, there can be no malafide on their part to avail inadmissible credit, in which case, extended period of limitation would not apply. Appeal dismissed - decided against Revenue.

Summary

Issues:
Whether services of 'Sales Commission Agents' can be considered cenvatable, and if the Service Tax paid on the same is available as a credit to the assessee.

Analysis:
The main issue in this appeal was whether the services provided by Sales Commission Agents could be considered as cenvatable, and if the Service Tax paid on these services could be credited to the assessee. The appellate authority ruled in favor of the respondent, stating that the services of commission agents are crucial for sales promotion as they identify potential buyers, explain product benefits, convince them to buy, and secure orders. The authority referred to a circular by the Board which clarified that services related to sales promotion, including those provided by commission agents, qualify as input services for availing cenvat credit. The authority also cited a previous Tribunal decision and a High Court ruling affirming the same. Additionally, an Explanation in the definition of input service was inserted retrospectively, further supporting the admissibility of cenvat credit for services of commission agents.

The Revenue contended that the matter was pending before the Supreme Court due to an appeal against a High Court decision. However, the learned AR acknowledged that there was no stay on the Tribunal decisions favoring the assessee. It was noted that the demand was time-barred as the show cause notice was issued after the relevant period, during which all decisions were in favor of the assessee. The absence of any appeal against the Tribunal's decision where the issue was considered in favor of the assessee strengthened the position that there was no malafide intent on the part of the assessee to claim inadmissible credit. Therefore, the extended period of limitation did not apply. Consequently, the appellate authority found no justifiable reason to interfere with the Commissioner (Appeals) order and rejected the Revenue's appeal.

In conclusion, the judgment upheld the admissibility of cenvat credit for the services of Sales Commission Agents, citing relevant legal provisions, circulars, and previous decisions. The time-barred nature of the demand, coupled with the absence of any appeal against favorable Tribunal decisions, supported the rejection of the Revenue's appeal.