2017 (9) TMI 263 - AT - Service Tax

Sales Commission Agent Service Tax eligible for Cenvat credit; Tribunal dismisses Revenue's appeal

The Tribunal upheld the decision that the Service Tax paid on Sales Commission Agent's service is eligible for Cenvat credit. The appellant provided ... CENVAT credit - input service - Sales Commission Agent’s service - denial on the ground that the expenses incurred are in connection with sales and not confirmed to ‘sales promotion’ as specified in the inclusive part of definition of input service contained in Rule 2(l) of the Cenvat Credit Rules, 2004 - Held that: - the job performed by the commission agent is for promoting the sales of the appellant’s products and not related to mere selling of goods. Since the phrase ‘sales promotion’ is finding place in the definition of input service for the purpose of availment of Cenvat credit, the credit taken by the respondent is in conformity with the Cenvat statute - appeal dismissed - decided against Revenue. Issues:Service Tax paid on Sales Commission Agent's service - Eligibility for Cenvat credit.Analysis:The Revenue appealed against the order passed by the Commissioner (Appeals), Central Excise, Meerut, dated 18-5-2016, arguing that the Service Tax paid on Sales Commission Agent's service is not eligible for Cenvat credit. The contention was that the expenses incurred were related to sales and did not fall under the category of 'sales promotion' as specified in the definition of input service in Rule 2(l) of the Cenvat Credit Rules, 2004.Upon hearing both sides and examining the records, it was noted that the appellant had provided certificates issued by the commission agents to demonstrate that the services rendered were indeed related to sales commission service. The activities carried out by the commission agents under the agreement with the appellant were primarily aimed at promoting and enhancing the sales of the appellant.The certificate issued by M/s. Supreme Marketing highlighted various aspects of the work undertaken by the commission agent, emphasizing efforts to reach out to customers, provide solutions, distribute sample stocks for sales promotion, and increase awareness about the products manufactured by the appellant. It was evident from the certificate that the commission agent's role was focused on sales promotion rather than mere selling of goods.Considering that the term 'sales promotion' was explicitly mentioned in the definition of input service for Cenvat credit eligibility, it was concluded that the credit availed by the respondent was in accordance with the Cenvat statute. Consequently, the appeal by the Revenue was deemed to lack merit, leading to its dismissal.In the final judgment pronounced on 2-2-2017, the Tribunal upheld the decision, emphasizing that the activities performed by the commission agent aligned with sales promotion, making the Service Tax paid on Sales Commission Agent's service eligible for Cenvat credit.