Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  Missing seized records must be considered while testing ITC claim; duplicate GST demands ordered corrected: Delhi High Court. *  GST appeal can’t be rejected without addressing taxpayer’s grounds: Allahabad High Court. *  Surplus IGST credit can offset CGST, SGST shortfall: GSTAT. *  GST refund can’t be denied when cancelled airfares are returned with tax: GSTAT. *  3 Hearing notices issued within 2 minutes: Gujarat High Court flags portal flaw, seeks report. *  GSTR-9, GSTR-9C filing for FY 2025-26 enabled; pending GSTR-1 and GSTR-3B must be filed first. *  Dupattas are exempt fabrics, can’t be taxed as fibres at 4%: Madras High Court. *  Full transitional credit allowed on capital goods received after GST rollout: GSTAT denies Rs. 6.99 lakh export duty credit. *  GST return mismatch alone can’t justify fraud proceedings: GSTAT orders fresh adjudication under section 73. *  Supplier found non-existent later can’t alone justify input tax credit denial: GSTAT. *  GST interest stops once tax reaches government account, can’t run until return filing: GSTAT. *  Cancelled flat booking- GST refund can’t be denied without excluding COVID period from limitation: GSTAT. *  India notifies rules of origin for India–New Zealand FTA. *  Incomplete E-bike kits classifiable as complete vehicles, but not eligible for CKD duty concession: CESTAT. *  Same GST rate on main input and output can’t by itself bar inverted duty refund: GSTAT. *  Unjust enrichment doesn’t apply to customs refunds from assessments finalised before July 13, 2006: Gujarat High Court. *  CENVAT credit can’t be denied solely because plant And machinery are embedded in earth: Karnataka High Court. *  DFIA exports ineligible for RoDTEP benefits; customs directs repayment with applicable interest. *  Second E-Way bill alone doesn’t prove another supply: GSTAT. *  Bail denied in Rs. 1.19 crore fake GST refund case over risk of accused absconding again: Punjab and Haryana High Court. *  GST registration can be restored after revocation deadline if outstanding dues are paid: Gauhati High Court. *  Multiple GST proceedings over same suppliers: Calcutta High Court directs dept. to share findings for adjudication. *  E-Governance portal services not OIDAR, fixed deposit interest not taxable: CESTAT. *  Rs. 500 Stamp duty required on authority letters for CAs, CMA and GST practitioners in Pune GST division.  *  Rs. 1.10 crore GST refund must be paid in cash after business closure: Allahabad High Court. *  Godown rent attracts 18% GST even when used exclusively for exempt agricultural warehousing: AAR. *  GST portal launches "Multi-State Registration" facility: one master TRN for registration applications across multiple States/UTs. *  RoDTEP scheme extended till 31st December, 2026.  *  Mere disagreement with order can’t override Rs. 20 lakh appeal limit: GSTAT. *  Customs interest can’t be backdated before confiscation liability is determined; nearly 8 year period excluded: Delhi High Court.
Subject News *  GST summons: anticipatory bail maintainable without arrest order, but relief denied in evasion case: Allahabad High Court. *  GST Appeal can’t be decided without hearing taxpayer’s objections to fresh evidence: Allahabad High Court. *  GST ITC can’t be reversed merely because supplier grants discount without reducing tax liability: GSTAT. *  Mere quoting of GST provision is not a valid charge: GSTAT quashes ITC denial. *  Personal hearing mandatory before adverse GST order, even without taxpayer’s request: Rajasthan High Court. *  Parallel bail pleas without full disclosure amount to abuse of process Rs. 43.08 crore GST case sent for fresh hearing: Supreme Court. *  GST refund based on unchallenged advance ruling can’t be recovered using later circular: GSTAT. *  Payment of GST alone doesn’t end interest and penalty liability when tax and interest remain unpaid beyond 30 days of notice: GSTAT. *  GST demand over builders’ 80% procurement rule requires reasoned adjudication: GSTAT. *  Eligible ITC doesn’t automatically entitle taxpayers to compensation cess refund on domestic sales: GSTAT. *  GST confiscation order passed before reply deadline invalid: GSTAT. *  GST interest can’t be retained after tax refund on delayed export receipts: Punjab & Haryana High Court. *  GST appeal can’t be dismissed over pre-deposit shortfall without opportunity To respond: Bombay High Court. *  DGGI SCN can’t be challenged before reply and adjudication:Chhattisgarh High Court. *  GST input tax credit can’t be denied solely due to supplier’s retrospective registration cancellation: GSTAT. *  GST notice must explain fraud allegations; merely repeating section 74 Is not enough:  Himachal Pradesh High Court. *  Audit detection alone can’t justify GST fraud penalty; specific suppression must be proved: GSTAT. *  GST order uploaded only under ‘Additional Notices’ tab without separate intimation set aside: Calcutta High Court. *  Service Tax appeal can’t be rejected for missing pre-deposit proof when payment is already recorded: CESTAT. *  SGST dept. can’t hear appeal against CGST order: Calcutta High Court. *  Mere dispatch of tax order can’t prove service or make appeal time-barred: CESTAT. *  Dealer incentives can’t be taxed merely on ledger entries: CESTAT. *  DGFT orders quashed for failure to supply DRI letter relied upon in SCN: Bombay High Court. *  GST penalty u/s 122(1A) can’t apply to Pre-2021 transactions; unregistered beneficiaries also covered: Delhi High Court. *  Expired E-way bill caused by wrong PIN code can’t justify GST penalty without intent to evade tax: GSTAT. *  Used railway rails can’t be taxed as track material without proof they are fit for reuse: CESTAT. *  Earlier DGGI notice doesn’t bar separate GST demand on different issue: Delhi High Court. *  ITC dispute involves no question of law: GSTAT directs appeal to Vice-President. *  Earlier DGGI notice doesn’t bar separate GST demand On different issue: Delhi High Court. *  No E-way bill required for interstate goods movement in november 2017: GSTAT quashes detention and penalty.  

Comments

Print   |    |  Comment

PJ/Case Law/2013-14/1666

Admissibility of credit on the service tax paid to commission agents for selling the goods.

Case:- WADPACK PVT.LTD. VERSUSCOMMISSIONER OF CENTRAL EXCISE, BANGLORE

Citation:- 2013 (293) E.L.T. 400 (Tri.-Bang.)

Brief Facts:-In this appeal filed by the assessee, the short question is whether, for the period from April 2005 to June 2007, the appellant was entitled to take service tax credit on the services provided by their commission agents. The original and first appellant authorities held against hem after holding that the service of the commission agent was for the activities of selling the goods of the assessee and not in relation to manufacture and clearance of the goods from the place of removal.

Appellant’s contention:-The appellant submitted that as “sale promotion” is a part of the very definition of “Input Service” under Rule 2(l) of the CENVAT Credit Rules, 2004, the benefit of the service tax on the commission paid by them to their sales agents cannot be denied on any ground that the expression “clearance of final products upto the place of removal” occurring in the above definition is not relevant to “sales promotion”. It is submitted that the payment of commission by the assessee to their agents for sale of their finished goods was for promoting the sale and hence the activity is very much covered by the expression "sales promotion" found in the definition of "input service". It is pointed out that these aspects were not examined by the learned Commissioner (Appeals). Even the plea of limitation was not properly ad­dressed. The appellate authority did not pay heed to the plea that copies of the relevant returns, which were submitted along with the reply to the show-cause notice, clearly indicated the factum of CENVAT credit having not been availed on sales commission. Therefore, the learned counsel submits, the allegation of suppression of facts with intent to avail undue benefit of CENVAT credit is base­less and, therefore, the extended period of limitation is not invocable in this case. In this connection, the learned counsel has also challenged the penalty imposed on the assessee.

On the merits of the case, reliance has been placed on Board's Circu­lar No. 943/4/2011-CX, dated 29-4-2011 (S. No. 5) wherein it was clarified that credit was admissible on the services of sale of dutiable goods on commission basis. Reliance is also placed on Order-in-Appeal No. 36/2012, dated 16-2-2012 passed by the Commissioner of Central Excise (Appeals-I), Bangalore in the same assessee's case, wherein CENVAT credit on sales commission was allowed in view of the definition of "input service", the Board's Circular ibid and case law including Ambuja Cement Ltd. v. Union of India [2009 (14) S.T.R.. 3 (P&H) = 2009 (236) E.L.T. 431 (P&H)] and Commissioner v. ABB Ltd. [2011 (23) S.T.R. 97 (Kar.)]. The learned counsel has also relied on Commissioner v. Ambika Overseas [2012 (278) E.L.T. 524 (Tri.-Del.) = 2010 (20) S.T.R. 514 (Tribunal)]. She has also referred to Paragraphs 27 & 78 of the judgment in the case of Commissioner v. Ultratech Cement Ltd. [2010 (20) S.T.R.. 577 (Bom.) = 2010 (260) E.L.T. 369 (Bom)].
 
Respondent’s contention:-The learned Superintendent (AR) has endeavored to justify the ap­pellate Commissioner's view but has not been able to cite any supporting deci­sion.
 
Reasoning of Judgment:-We have considered the submission from both side, we find that a formidable case for the appellant inasmuch as their claim is fully supported by the very definition of "input service" under Rule 2(l) of the CCR, 2004. "Sales promotion" expressly figure in the inclusion part of the definition. It is not even the Revenue's case that the appellant was not paying commission for "sales promotion". Where a particular activity is expressly mentioned in the inclusion part of the definition, one need not bother to examine whether it has satisfied the ingredients of the main part of the definition. This is the view expressed by the Hon'ble Bombay High Court in Ultratech Cement Ltd. case (supra). This view was acknowledged and accepted by the Board in the aforesaid Circular and the same was followed by the Commissioner (Appeals) in the assessee's own case vide Order-in-Appeal No. 36/2012-C.E., dated 16-2-2012. Nobody has claimed before Tribunal that the said Order-in-Appeal was appealed against. Apparently, it was ac­cepted by the department, being in keeping with the Board's clarification and the definition of "input service". The Tribunal's decision in the case of Ambika Over­seas (supra) is also to the same effect. No binding decision to the contra has been cited before Tribunal.

Accordingly, the impugned order is set aside and the appeal is allowed.

Decision:-  Appeal was allowed.

Comment:- Admissibility of credit on service tax paid on commission paid to the commission agents is under constant litigation in view of divergent decisions being given by the courts. Recently, high court has disallowed the credit of the same in the case of Cadila Healthcare Ltd.

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com