Tribunal affirms Cenvat credit for sales commission; Department's appeal dismissed

The Tribunal upheld the validity of availing Cenvat credit on service tax paid for sales commission, citing previous judgments and the retrospective nature of a clarification regarding sales promotion services. The Department's appeal against the Commissioner (Appeals) order was dismissed, with the Tribunal finding no merit in the Department's arguments. The order was pronounced on 14/05/2018.

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Issues:
Department's appeal against Commissioner (Appeals) order on Cenvat credit for service tax paid on sales commission.

Analysis:
The appeal involved the issue of whether availing Cenvat credit for service tax paid on sales commission by M/s Shree Rathi Steel (Dakshin) Ltd. was valid under Rule 2(l) of the Cenvat Credit Rules, 2004. The Department contended that the sales activity did not promote the assessee's product directly or indirectly, thus not falling under the definition of input service. However, the Tribunal referred to a notification amending the definition of 'input services,' clarifying that sales promotion included services by sale of dutiable goods on commission basis. This clarification was deemed retrospective in nature, as explained in the judgment of Essar Steel India Ltd. vs. CCE & ST, Surat. The Tribunal cited various cases, including M/s Mangalam Cement Ltd., to support the allowance of Cenvat credit on sales commission services.

The Tribunal concluded that the issue was settled law based on previous judgments and the retrospective nature of the clarification regarding sales promotion services. Citing the decision in Essar Steel India Ltd., the Tribunal upheld the validity of availing Cenvat credit on service tax paid for sales commission. The Tribunal found no merit in the Department's appeal against the Commissioner (Appeals) order and dismissed the appeal accordingly. The order was pronounced on 14/05/2018.

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