2009 (7) TMI 633 - AT - Service Tax

Cenvat Credit- Assessee availed Cenvat Credit of service tax on commission paid to commission agent for receiving services of latter. Revenue denied credit on ground that benefit was liable to be restricted to procurement of purchase orders by commission agents and was not admissible insofar as collection of sale price of goods was concerned. whether bifurcating commission agent s function into pre-clearance and post-clearance of goods as done by lower authorities is clearly not permissible inasmuch as commission agents service is one integrated service and, therefore, assessee was entitled to benefit of Cenvat Credit on entire amount of commission paid by it to commission agent.

Summary

The appellate tribunal, CESTAT, Mumbai, led by P.G. Chacko, Judicial Member, heard an appeal regarding a show-cause notice which confirmed a demand against the assessee for service tax, education cess, interest, and penalty. The original authority's decision was upheld by the first appellate authority, prompting the present appeal. The key question was whether Cenvat credit of service tax on commission paid to a commission agent was admissible. The lower authorities had restricted this benefit, but the tribunal ruled that the commission agent's service was an integrated whole and not divisible as suggested. The appellant was thus entitled to the Cenvat credit for the entire commission paid. The tribunal found that the issue was already settled in favor of the appellant by a previous case law and allowed the appeal, setting aside the impugned order. The decision was based on the fact that the commission agent service was covered by the Cenvat Credit Rules, 2004, and should not have been divided as done by the lower authorities. The appellant was granted the benefit of the Cenvat credit on the commission paid to the agent for the service received during the disputed period. The case law cited by the appellant's counsel supported this decision, and there was no evidence to suggest that the department had not accepted the Tribunal's previous ruling on the matter. Therefore, the appeal was successful.