Whether commission paid for sale of goods part of sales promotion?

PJ/CASE LAW/2015-16/2897

Case:-COMMISSIONER OF CENTRAL EXCISE, SURAT VERSUS REMI METALS GUJARAT LTD.

Citation:- 2014 (36) S.T.R. 158 (Tri. - Ahmd.)

Brief Facts:-Credit of Service Tax availed has been allowed in the impugned order relying upon the decision of the Tribunal in the case of Lanco Industries Ltd. - 2010 (17) S.T.R. 350 (Tri.-Bang.) and HEG Ltd. - 2010 (18) S.T.R. 446 (Tri.-Delhi). Revenue is in appeal against this decision.

Appellants Contention:-The grounds taken by the ld. AR against the order are that the sales commission was paid by the respondent after the sale of goods and therefore it cannot be said and considered as for sales promotion; the service has no nexus with the manufacture and is rendered after the goods are removed and credit of Service Tax paid after the place of removal is not admissible and thirdly it has no nexus with the manufacture.

Respondents Contentions:-Nobody is present on behalf of the respondent.

Reasoning Of Judgement:-The tribunal have considered the submissions. They find that the Commissioner in the impugned order has relied upon the decision of the Tribunal in the case of Lanco Industries which is directly on the issue involved. Ld. AR fairly agrees that in the appeal memorandum filed by the Revenue there is no contrary decision cited nor he is able to cite any decision showing that credit is not admissible. The reliance of the Revenue on decision of Hon’ble Bombay High Court in the case of Ultratech Cement Ltd. - 2010 (260) E.L.T. 369 (Bom.) = 2010 (20) S.T.R. 577 (Bom.) misplaced because sales promotion as a service was not considered in the decision at all. In any case in their view, the commission paid for the selling activity is part of sales promotion and if Service Tax is leviable for that purpose, credit would be admissible under the broad category of sales promotion which is specifically covered in the definition of input service. Under these circumstances, they find that appeal filed by the revenue has no merit and accordingly the same is rejected.

Decision:-Appeal rejected.

Comment:- The gist of the case is thatthe commission paid for the selling activity is part of sales promotion and if Service Tax is leviable for that purpose, cenvat credit would be admissible under the broad category of sales promotion which is specifically covered in the definition of input service. However, this decision has not considered the Punjab and Haryana decision given in the case of Ambica Overseas Ltd. which was recently overruled by Gujarat High Court in the case of Cadila Healthcare Ltd. It appears that Tribunal did not take note of the Gujarat High Court decision which was decision delivered by the jurisdictional High Court.

Prepared By:- Neelam Jain

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PJ/CASE LAW/2015-16/2897

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