2013 (6) TMI 616 - AT - Service Tax

Cenvat Credit - Input Services - commission agent service - nexus with manufacturing - Held that - Hon ble Punjab and Haryana High Court in the case of C.C.E, Ludhiana vs. Ambika Overseas 2011 (7) TMI 980 - PUNJAB & HARYANA HIGH COURT held that the assessee a manufacturer is entitled to the credit of services provided by the Overseas Commission Agent for canvassing and procuring the order as these activities are sale promotion. Revenue relied upon the decision of the Tribunal whereby the Tribunal after relying upon the decision in the case of Maruti Suzuki Ltd. 2009 (8) TMI 14 - SUPREME COURT held in favour of Revenue. The Hon ble Supreme Court in the case of Ramala Sahakari Chini Mills Ltd. vs. C.C.E., Meerut I (2010 (11) TMI 34 - SUPREME COURT OF INDIA) referred the matter to Larger Bench for decision on the issue. In these circumstances, and in view of the Hon ble P & H High Court in the case of Ambika Overseas (2011 (7) TMI 980 - PUNJAB & HARYANA HIGH COURT) which is specific on the issue, therefore, I find that the impugned order is not sustainable and the same is set aside. - Decided in favor of assessee.

Summary

Issues:
- Denial of credit on service tax paid on commission agent service in relation to the manufacturing of goods.

Analysis:

Issue 1: Denial of credit on service tax paid on commission agent service
The appellant appealed against the order denying credit on service tax paid for commission agent services related to the sale of sugar, arguing that such services fall under the definition of input service. The appellant contended that as a sugar manufacturer, they availed business auxiliary services for sales promotion through commission agents. The appellant cited the decision of the Hon'ble Punjab and Haryana High Court in C.C.E., Ludhiana vs. Ambika Overseas, supporting the eligibility of credit for services provided by commission agents for sales promotion activities.

Issue 2: Interpretation of input service definition
The Revenue relied on the Tribunal's decision in KBACE Tech Pvt. Ltd. v. C.C.E and Service Tax, Bangalore, where it was held that the definition of input service comprises specific, inclusive, and place of use criteria. The Tribunal referred to the Supreme Court's decision in Maruti Suzuki Ltd. vs. Commissioner of Central Excise, emphasizing the need for claimed input services to meet specific tests. Additionally, the Revenue cited the Tribunal's decision in Chemplast Sanmar Ltd. vs. C.C.E., Salem, supporting the denial of credit based on previous rulings.

Issue 3: Applicability of input service definition
The appellant argued that the Supreme Court referred the matter to a Larger Bench for reconsideration, challenging the decisions in Maruti Suzuki Ltd. and Ramala Sahakari Chini Mills Ltd. The Tribunal's denial of credit on service tax paid by the commission agent for the sale of sugar was contested by the appellant, highlighting that the definition of input service covers services related to sales promotion. The judgment referred to the definition of input service, emphasizing that services used for sales promotion are included within its scope.

Conclusion
The Tribunal, in line with the decision of the Hon'ble Punjab and Haryana High Court in Ambika Overseas case, found in favor of the appellant, setting aside the impugned order that denied credit on service tax paid for commission agent services. The judgment emphasized the eligibility of manufacturers to claim credit for services provided by commission agents for sales promotion activities, aligning with the definition of input service. The appeal was allowed, overturning the denial of credit on the service tax paid for commission agent services related to the sale of manufactured goods.