2018 (6) TMI 1481 - AT - Central Excise

CENVAT Credit - Commission given to the commission agent - the impugned order is passed on presumption that the commission agent may not have paid the service tax liability to the Govt. exchequer - Held that - It is well settled law that if the service tax liability is discharged by the service provider and if the services are eligible for availment of CENVAT Credit, Credit cannot be denied at the recipient, end more so, only on a presumptive ground that there is no evidence that service tax was credited to the Govt. exchequer - credit allowed - appeal allowed - decided in favor of appelalnt.

Summary

Issues:
Eligibility to avail CENVAT Credit of service tax paid on commission to commission agent.

Analysis:
The appeal was directed against Order-in-Appeal No. PI/MMD/252/2012 dated 27.12.2012. The issue revolved around the eligibility to avail CENVAT Credit of service tax paid on the commission given to the commission agent. The Revenue contended that the commission paid was 'not due' as the commission agent did not provide any service to the appellant. However, the appellant argued that they had paid the commission agent, which was reflected in the invoice and debit note, along with the service tax liability. The lower authorities did not dispute the service tax liability indicated in the documents. The appellant relied on a Tribunal decision in a similar case, which was held in their favor.

Upon careful consideration of submissions and perusal of records, it was found that the impugned order was based on the presumption that the commission agent might not have paid the service tax liability to the government. However, it was noted that the commission agent had provided documentary evidence of paying the service tax to the authorities. The lower authorities should have verified this before issuing a show-cause notice to reverse the CENVAT Credit. It was established that if the service tax liability is discharged by the service provider and the services are eligible for CENVAT Credit, the credit cannot be denied at the recipient's end based on presumptive grounds. The judgment of the Tribunal in a similar case was cited, which favored the appellant.

Consequently, it was concluded that the impugned order was unsustainable and was set aside. The appeal was allowed, and the impugned order was overturned. The decision was made based on the evidence provided by the commission agent regarding the payment of service tax, in line with the legal principles established by previous Tribunal judgments.

(Order dictated in Court)