2019 (1) TMI 236 - AT - Central Excise

CENVAT Credit - input service - service received from selling agents, to whom the appellant paid by way of sales commission on the sales effective through them - Held that - CENVAT credit is available in respect of sales commission. Further, the notification dated 3.2.2016 has clarified the law by way of explanation, so as to reduce the litigation. The explanation inserted with effect from 3.02.2016 has got retrospective effect. Even prior to 03.02.2016, the activity of a sales commission gent was in the nature of sales promotion only. Credit allowed - appeal dismissed - decided against Revenue.

Summary

Issues:
Whether the respondent is entitled to cenvat credit on input service received from selling agents through sales commission.

Analysis:
The appellant availed cenvat credit on sales commission paid to selling agents for the period August 2014 to December 2015. The revenue contended that such credit is not permissible under the statutory provisions. The show cause notice proposed a demand along with interest and penalty. The order-in-original confirmed the demand and imposed a penalty under Rule 15(2) of CCR, 2004.

The ld. Commissioner (Appeals) observed that services related to sales promotion, including those provided by commission agents, qualify as "input service." Referring to a Board Circular and a notification, the Commissioner held that services of commission agents in sales of goods qualify as input service, allowing cenvat credit on service tax paid for such services. The notification clarified the legal position and was deemed to have retrospective effect.

The revenue appealed, citing a Supreme Court case to argue against the retrospective application of the notification. However, the Tribunal found that the notification clarified existing law and had retrospective effect. The Tribunal noted that prior to the notification, the activity of a sales commission agent was considered sales promotion. Consequently, the appeal by the revenue was dismissed, affirming the respondent's entitlement to cenvat credit on services provided by commission agents.

In conclusion, the Tribunal upheld the decision of the ld. Commissioner (Appeals), emphasizing the retrospective effect of the notification and the nature of services provided by commission agents as sales promotion. The respondent was granted consequential benefits in accordance with the law.