2010 (2) TMI 232 - AT - Service Tax

Business auxiliary service- Revenue is in appeal against the decision of the Commissioner (Appeals) who has allowed the credit of service tax paid on business auxiliary service (Commission on Export sales) provided by a person from outside India who does not have an office in India. Held that- M/s Coca-cola India (P) Ltd. the respondents are eligible for the benefit of credit of service tax paid on the service rendered by the agent also. Accordingly appeal filed by the Revenue has no merit and therefore the same is rejected.

Summary

Issues:
- Eligibility for credit of service tax paid on commission for export sales.
- Applicability of previous tribunal decisions.
- Interpretation of the definition of input service for manufacturers.

Analysis:
1. Eligibility for credit of service tax paid on commission for export sales:
The appeal concerns the eligibility of the appellant for the credit of service tax paid on business auxiliary service (Commission on Export sales) provided by a person from outside India. The Revenue argues that the service was rendered after the removal and, therefore, not eligible for credit. However, the advocate for the respondent contends that the service is related to business activities and should be eligible for credit. The decision in the case of M/s Coca-cola India (P) Ltd. is cited, emphasizing that services rendered in relation to business activities are admissible for credit. The conclusion is that the commission agent's service is indeed related to business activity and qualifies for the credit.

2. Applicability of previous tribunal decisions:
The Revenue challenges the decision of the Commissioner (Appeals) based on the reliance on previous tribunal decisions. The JDR for the Revenue argues that the decision in the case of M/s Metro Shoes (P) Ltd. and M/s Excel Crop Care Ltd. does not support the appellant's stand for credit. However, the advocate for the respondent distinguishes the M/s Excel Crop Care case based on subsequent tribunal decisions, indicating that the decision in the case of M/s Metro Shoes (P) Ltd. is correctly applied by the Commissioner (Appeals). Ultimately, the Tribunal rejects the Revenue's appeal, stating that the service tax paid on the commission agent's service is admissible for credit.

3. Interpretation of the definition of input service for manufacturers:
The judgment delves into a detailed analysis of the definition of input service for manufacturers, as highlighted in the case of M/s Coca-cola India (P) Ltd. The judgment emphasizes that services used in relation to business activities and outward transportation up to the place of removal are eligible for credit. The Tribunal concludes that the service provided by the commission agent falls under the category of sales promotion and is directly related to business activities, making the appellant eligible for the credit of service tax paid on such services. The judgment aligns with the legislative intent to treat inputs for manufacture and input services differently, with a focus on allowing credit for services related to business activities.

In summary, the judgment clarifies the eligibility of the appellant for the credit of service tax paid on commission for export sales, addresses the applicability of previous tribunal decisions, and provides a comprehensive interpretation of the definition of input service for manufacturers, ultimately ruling in favor of the appellant based on the service's direct relation to business activities.