Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  The GSTN has issued an Advisory dated 21.04.2026 about the introduction of an Offline Tool for the Invoice Management System (IMS)  *  CBIC extends due dates for filing of FORM GSTR 3B  for the month of April 2026 *  Interest cannot be imposed in adjudication order, if not demanded/quantified in show cause notice : Allahabad HC *  Wheelchairs with toileting facility eligible for exemption: CESTAT affirms customs duty exemption to importer *  Industries urge GST council to allow inverted duty refunds on input services *  Tamil Nadu GST dept introduced virtual hearing facility for GST appeals under under section 107 of the TNGST act: detailed guidelines  *  CIC urges authorities to implement GST evasion complaint tracking system *  Even if the assessee opts "NO" for personal hearing in form DRC-06 ,The mandatory requirement under section 75(4) to grant opportunity of hearing cannot be waived:Gujarat High Court  *  Glufosinate imports curbs imposed by govt *  Government extends Re-import period for exported cut & polished diamonds *  CIC flags lack of tracking system for tax evasion complaints,urges GST authorities to improve transparency *  No Custodial Interrogation needed in GST fraud case based on documentary evidence already in Department's Possession : Chattisgarh HC *  Orders under section cannot be sustained if passed without considering the taxpayer's objections and without granting a personal hearing:Gujarat High Court *  Mere cancellation of supplier's registration cannot,by itself,justify denial of ITC or cancellation of the recipient's registration:Bombay High Court *  High Court sets aside GST notice citing factual errors and natural justice violations *  Provisional Bank Attachment under Section. 110 of Customs Act Unsustainable Beyond Statutory period without Extension order: Bombay HC orders to defreeze accounts *  Post Clearance MRP Alteration by Distributor Does not attract Differential Customs Duty: CESTAT *  DGFT Expands scope of 'Screws' classification under RoDTEP Scheme  *  E-way bills surze to all time high of 140.6 million in March *  GST Exemption Allowed on Pure Labour Services for Standalone Houses: AAR  *  GST Payable Only on Margin in Second-Hand Car Sales, Subject to Strict Conditions and No ITC Claim: AAR *  DGFT rolls out procedure for allocation of calcined coke *  GST portal update : Pre-deposit amount now editable in Appeals *  J&K HC declared TMT scrap a 'Specified Good' eligibile for GST refunds under Support Scheme  *  Pigmy agents are employees of banks; no GST can be levied on commission  paid to them : Karnataka HC *  DGFT Revises HS Code Description for Screws Under RoDTEP *  GST Registration Cancellation Invalid Without Proper Service of Notice: Allahabad High Court. *  Bengaluru CGST | GST Backlog Appeals Deadline Fixed at June 30, 2026 *  No Time Bar on Refund of Service Tax for Services Not Rendered: CESTAT  Remands Indiabulls Case for Unjust Enrichment Check. *  Supreme Court Holds Renewable Energy Incentive Must Benefit Generators, Not Be Adjusted in Tariff
Subject News *   Delhi HC Quashes Order, Says Reminder Cannot Validate Improperly Served GST SCN *  KARNATAKA HIGH COURT REMANDS GST SHORTFALL MATTER DUE TO ABSENCE OF PERSONAL HEARING   *  CESTAT cancels confiscation and penalties on imported computer cabinet cases: Custom duty restricted to 111 surplus units *  Deposit of tax during search or investigation cannot be treated as 'Voluntary Payment' : Bombay High Court *  Section 76 of the CGST cannot be invoked where the tax has already been duly deposited, even if through another registration of the same entity: Madras High Court *  Sec 74 allows use of material regardless of source; illegality or flaws in section 67 search do not vitiate valid adjudication: HC *  Inter-State transfer of ITC on Amalgamation permissible as given under section 18(3) read with rule 41 of the CGST rules, 2017: Gujarat High Court *  HC: No GST on commisson paid to Pigmy Agents *  IGST refund denial on illegible bill of lading invalid absent chance to furnish docs; merit reconsideration in appeals directed: HC *  ITC is not admissible on GST paid on leasehold rights of land used fpr setting up an air seperation plant: AAAR,Tamil Nadu *  GST: No penalty under Section 74 after voluntary ITC reversal due to non-existent supplier : High Court *  TN AAAR denies GST ITC on Land Lease under Sec. 17(5)(d) for setting up plant and machinery *  GST proceedings quashed as notices sent to old address, despite updated address in registration *  Importer Can’t Be Penalised for Alleged IGCR Procedural Lapses Without Evidence of Departmental Error: CESTAT *  Structured Healthcare Training Not ‘Charitable Activity’, 18% GST Payable: AAR  *  CESTAT As The Appellate Authority For Central Sales Tax Disputes: A Paradigm Shift Under Finance Act, 2023 *   Rs. 25K Cost Imposed On SGST Joint Commissioner for Attaching Bank  Accounts Without Forming Mandatory “Opinion”: Bombay HC *   Ex-Parte GST Order Without Hearing Violates Natural Justice: Karnataka  High Court Quashes Adjudication and Bank Attachment.  *   Retrospective GST Cancellation Can’t Invalidate Genuine Transactions:  Jaipur Commissioner (Appeals) Quashes Rs. 95,670 ITC Demand. *   GST Pre-Deposit Non-Compliance: Allahabad High Court Allows Appeal  Subject to Rs. 30 Lakh Balance Deposit, Recognises Offline Filing. *  Documentary Nature of Evidence: Allahabad High Court Grants Bail in Rs. 32.66 Crore Fake ITC Fraud Case *  Supreme Court Flags Systemic Bias in Army’s Permanent Commission Process for Women Officers *  Re-Determination of Land Compensation Can Be Based on Appellate Court Awards, Clarifies Scope of S. 28-A: Supreme Court. *  Supreme Court Imposes Rs. 5 Lakh Costs On Rent Authority Officer For Acting Beyond Jurisdiction. *  DGGI Meerut | Court Denies Bail to Accused in Claiming Fake ITC And Export Refunds *  Denial of GST Rate Revision Benefit to Contractor Violates Article 14: Rajasthan HC *  GST Registration Cancellation for Non-Filing of Returns: Gauhati High Court Directs Restoration on Compliance. *   Supreme Court Quashes FEMA Adjudication Orders, Revives Proceedings at  Show Cause Stage. *   Higher Rank, Harsher Punishment Justified: Supreme Court Restores Dismissal  of Bank Manager in Misappropriation Case. *   Limitation for Export Refund to Be Counted from Foreign Exchange Realisation,  Not From Export Invoices Issuance: CESTAT  

Comments

Print   |    |  Comment

PJ/Case law/2014-15/2278

Whether credit allowed on service tax paid on commission agent service?

Case:- BAJAJ HINDUSTAN LTD. Versus COMMISSIONER OF CENTRAL EXCISE, LUCKNOW
 
Citation:- 2013 (30) S.T.R. 675 (Tri. - Del.)
 

Brief facts:-The appellant filed this appeal against the impugned order whereby the credit in respect of service tax which has been paid on the commission agent service is denied on the ground that commission agent service is nothing to do with the manufacturing of goods and its post manufacturing activity.
 
Appellant’s contentions:- The contention of the appellant is that appellants are engaged in the manufacture of sugar and therefore, the appellants availed business auxiliary services in respect of services of commission agent regarding the sale of sugar. The contention is that as per definition of ‘input service’ under Rule 2(l), the sale promotion used is covered under the scope of input service. The appellant relied upon the decision of Hon’ble Punjab and Haryana High Court in the case of C.C.E., Ludhiana V. Ambika Overseas reported in 2012 (25)S.T.R.348.
 
Further, the appellant submitted that Hon’ble Supreme Court has referred the issue to the Larger Bench to reconsider the decisions of the Hon’ble Supreme Court in the case of Maruti Suzuki Ltd. (supra) and in the case of Ramala Sahakari Chini Mills Ltd. v. C.C.E., Meerut-I reported in 2010 (260)E.L.T.321 (S.C.).
 
 
Respondent’s contentions:-Revenue relied upon the decision of the Tribunal in the case of KBACE Tech Pvt. Ltd. v. C.C.E and Service Tax, Bangalore reported in 2010 (18)S.T.R.281and submitted that the Tribunal held that definition of input service can be divided into three parts namely (a) specific part (b) inclusive part and (c) place of use. Therefore, while deciding what is an eligible input service for a specific output service, the claimed input service should also be required to meet the tests specified though the same were rendered in the context of goods rather than services. The contention is that Tribunal relied upon the decision of Hon’ble Supreme Court in the case of Maruti Suzuki Ltd. v. Commissioner of Central Excise reported in 2009 (240)E.L.T.641 (S.C.).
Revenue relied upon the decision of the Tribunal in the case of Chemplast Sanmar Ltd. v. C.C.E., Salem reported in 2010 (250)E.L.T.46 and submitted that the Tribunal followed the earlier decision where same view has been taken.
 
Reasoning of judgment:-The Hon’ble court find that credit has been denied in respect of service tax paid by commission agent which is in respect of sale of sugar manufactured by the appellant. As per the provision of Rule 2(l) ‘input service’ means any service used by a manufacturer, whether directly or indirectly in or in relation to manufacture of goods and clearance of final products from place of removal. For ready reference, the definition of ‘input service’ is reproduced below:

“Input service” means any service, -
(i)used by a provider of [output service] for providing an output service; or
(ii)used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal,

and includes services used in relation to modernisation, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal;

From the above definition it is clear that input service means any service which includes services in respect of sales promotion.

Hon’ble Punjab and Haryana High Court in the case of C.C.E, Ludhiana V. Ambika Overseas reported in 2012 (25)S.T.R.348 (P & H)held that the assessee a manufacturer is entitled to the credit of services provided by the Overseas Commission Agent for canvassing and procuring the order as these activities are sale promotion. Revenue relied upon the decision of the Tribunal whereby the Tribunal after relying upon the decision in the case of Maruti Suzuki Ltd. held in favour of Revenue. The Hon’ble Supreme Court in the case of Ramala Sahakari Chini Mills Ltd. V. C.C.E., Meerut-I (supra) referred the matter to Larger Bench for decision on the issue. In these circumstances, and in view of the Hon’ble P & H High Court in the case of Ambika Overseas (supra) which is specific on the issue, therefore, they find that the impugned order is not sustainable and the same is set aside. The appeal is allowed.
 
Decision:-Appeal allowed.

Comment:- The essence of the case that the Cenvat credit of service tax paid on commission agent service is admissible as it is covered by the sales promotion activity specifically included in the defination of input service. However, recently Gujarat High Court in the case of Cadila Healthcare has disallowed the credit of service tax paid to commission agents on the reasoning that the commission given to such agents is more appropriately linked with sales rather than sales promotion. But, as the assessee is situated in Lucknow, the decision of Punjab and Haryana High Court was made applicable and so the appeal was allowed. It is also worth observing that whenever there are different judgements given by the High Court on the same issue, differential treatment creeps in between assessees of different areas.

Prepared By:- Monika Tak

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