2013 (6) TMI 388 - AT - Service Tax

Commission Agent Services Qualify for Cenvat Credit | Tax Law Clarity

The Appellate Tribunal CESTAT AHMEDABAD ruled in favor of the appellant, a Commission Agent, allowing the availment of cenvat credit for service tax paid. ... Cenvat Credit - Input services - commission agent services - Rule 2(l) of CCR - Held that:- the appellant has been taking the services of the Commission Agent for sale of the final products which is an activity relating to business. - Credit allowed. Issues involved: Eligibility of availment of cenvat credit of service tax by Commission Agent.Analysis:The judgment by the Appellate Tribunal CESTAT AHMEDABAD, delivered by Mr. M.V. Ravindaran, pertains to an appeal against an order dated 09.11.2010 regarding the eligibility of cenvat credit of service tax by a Commission Agent. The Revenue contended that the appellant was not entitled to the cenvat credit on the basis that Commission Agents do not qualify as input services under Rule 2(l) of the Cenvat Credit Rules, 2004. Both the adjudicating authority and the first appellate authority ruled against the assessee on this ground. However, the Tribunal referred to the decision of the Hon'ble High Court of Karnataka in the case of ABB Limited, which established the eligibility of cenvat credit for activities related to business. Since the appellant had utilized the services of the Commission Agent for the sale of final products, which is a business-related activity, the Tribunal found in favor of the assessee. The Tribunal also cited previous decisions in similar cases, such as Mangalam Drugs & Organics Ltd and M.K. Industries, where the issue was decided in favor of the assessee based on identical facts. Consequently, the Tribunal set aside the impugned order and allowed the appeal with any consequential relief.This judgment clarifies the interpretation of the eligibility of cenvat credit for service tax paid by a Commission Agent. It emphasizes that activities related to business, such as utilizing Commission Agent services for the sale of final products, qualify for cenvat credit. The decision is based on established legal principles and previous precedents, ensuring consistency in the application of tax laws. The Tribunal's analysis demonstrates a thorough consideration of the legal framework and relevant case law to arrive at a reasoned decision in favor of the appellant. The judgment provides clarity on the scope of input services eligible for cenvat credit, aligning with the broader objective of promoting tax compliance and facilitating business operations within the regulatory framework.