2019 (2) TMI 1035 - AT - Service Tax

CENVAT Credit - Input services - service tax paid by them on the commission charged by the commission agents as the service of commission agent does not have a direct link in providing the output services, or in the manufacture of their finished goods - Held that - The matter is no longer res integra as the issue has already been decided in the appellants own case M/S GENUS POWER INFRASTRUCTURE LTD. VERSUS CST, JAIPUR - I 2016 (10) TMI 578 - CESTAT NEW DELHI where it was held that overseas commission agents used for procuring orders would be covered under input service - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Entitlement to cenvat credit on service tax paid by commission agents.
2. Admissibility of cenvat credit under Rule 2(l) and Rule 3 of Cenvat Credit Rules, 2004.
3. Classification of commission agents' services as input services.
4. Allegation of willful suppression of facts regarding cenvat credit utilization.

Analysis:
The appellants, engaged in providing ECI services to electricity boards, faced a demand of &8377;1,65,44,428/- due to the department's contention that cenvat credit on service tax paid by commission agents was inadmissible. The department argued that commission agent services lacked a direct link to output services or goods manufacture, thus disallowing the credit. The Order-in-Original dated 10.2.2015 confirmed the demand and imposed a penalty under relevant provisions. The appellants challenged this order, asserting that commission agents' services were essential inputs for ECI services, citing previous decisions like Genus Power Infrastructure Ltd. and others. The Tribunal noted that the issue had been previously decided in the appellants' favor in Final Order No. 53526/2016, emphasizing the definition of 'input service' under Rule 2(l) of Cenvat Credit Rules.

The Tribunal's analysis focused on whether the credit on input services was rightfully taken and properly utilized for tax payment on output services. It referred to the definition of 'input service' encompassing services used for providing output services or in relation to manufacturing final products. The Tribunal found that commission agent services, utilized for procuring Turnkey orders from DISCOMS involving both goods and services, qualified as input services. Citing precedents like Commissioner vs. Ambika Overseas and Carrier Air conditioning & Refrigeration Limited, the Tribunal upheld the correctness of availing cenvat credit on input services. Consequently, the Tribunal set aside the Order-in-Original dated 10th February, 2015, allowing the appeal in favor of the appellants based on the precedent and the definition of 'input service' provided in the Cenvat Credit Rules.

In conclusion, the Tribunal's decision clarified the entitlement of the appellants to cenvat credit on service tax paid by commission agents, emphasizing the definition of 'input service' under the Cenvat Credit Rules. The Tribunal's analysis highlighted the importance of input services in relation to output services, supported by legal precedents, ultimately leading to the allowance of the appeal and the setting aside of the original order demanding the disputed amount and penalty.