Commission agent services eligible for cenvat credit under retrospective effect

The Tribunal upheld the decision of the ld. Commissioner (Appeals), allowing the respondent to claim cenvat credit on services provided by commission agents for sales promotion. The Tribunal determined that the notification clarifying the eligibility of commission agent services as input services had retrospective effect, dismissing the revenue's appeal against it. The respondent was granted the benefit of cenvat credit in compliance with the law.

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Issues:
Whether the respondent is entitled to cenvat credit on input service received from selling agents through sales commission.

Analysis:
The appellant availed cenvat credit on sales commission paid to selling agents for the period August 2014 to December 2015. The revenue contended that such credit is not permissible under the statutory provisions. The show cause notice proposed a demand along with interest and penalty. The order-in-original confirmed the demand and imposed a penalty under Rule 15(2) of CCR, 2004.

The ld. Commissioner (Appeals) observed that services related to sales promotion, including those provided by commission agents, qualify as "input service." Referring to a Board Circular and a notification, the Commissioner held that services of commission agents in sales of goods qualify as input service, allowing cenvat credit on service tax paid for such services. The notification clarified the legal position and was deemed to have retrospective effect.

The revenue appealed, citing a Supreme Court case to argue against the retrospective application of the notification. However, the Tribunal found that the notification clarified existing law and had retrospective effect. The Tribunal noted that prior to the notification, the activity of a sales commission agent was considered sales promotion. Consequently, the appeal by the revenue was dismissed, affirming the respondent's entitlement to cenvat credit on services provided by commission agents.

In conclusion, the Tribunal upheld the decision of the ld. Commissioner (Appeals), emphasizing the retrospective effect of the notification and the nature of services provided by commission agents as sales promotion. The respondent was granted consequential benefits in accordance with the law.

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