COMMISSION AGENT SERVICE TAX CREDIT AS A INPUT SERVICE

[Guest]

DEAR SIR,

CAN WE AVAIL SERVICE TAX CREDIT ON COMMISSION AGENT SERVICE (SALES COMMISSION) AS A INPUT SERVICE, SINCE OUR UNIT IS IN MAHARASHTRA, PLEASE EXPLAIN , THANKS & REGARDS , URGENT REQUIRED

[phaniraju konidena]

Dear Mr.Sandesh Shinde,

As decided by the Hon'ble High Court of Gujarat in the case of CCE, Ahmedabad-II Vs. Cadila Healthcare Ltd.,[Tax Appeal No.353 of 2010 and 204 of 2011] = 2013 (1) TMI 304 - GUJARAT HIGH COURT while allowing the appeal of revenue that "CENVAT credit is not admissible in respect of the commission paid to commission agentsassessee was entitled to avail of CENVAT credit in relation to service tax paid in relation to technical testing and analysis services availed by it."

Hence, the said services are not eligible to avail the cenvat credit.

[PAWAN KUMAR]

As per my view, it is the eligible input service and you may avail cenvat on it.

[Madhukar N Hiregange]

There are some case laws where the cenvat credit on commission is being questioned. The cenvat credit on marketing and market development - advertisement and business promotion is clearly available. The need to prove that the order comes before the manufacture is the important factor.

[YAGAY andSUN]

Dear Sandesh,

Despite of having judgment either side, the facts of the this matter would be the deciding factor that whether such services would fall under the input services of not.

Regards,

Team YAGAY & SUN

(Management and Indirect Tax Consultants)

yagaysun at the rate of india.com

9818131923

[Rajagopalan Ranganathan]

Sir,

    As per Sl. No. 5 of  CBEC Circular No. 943/4/2011-CX., dated 29-4-2011 the definition of input services allows all credit on services used for clearance of final products up to the place of removal. Moreover activity of sale promotion is specifically allowed and on many occasions the remuneration for same is linked to actual sale. Reading the provisions harmoniously it is clarified that credit is admissible on the services of sale of dutiable goods on commission basis.

[yash arya]

Dear Madhukar sir,

Going by your analogy, as the sales commission is generally linked to Sales Turnover, the Dept.can conclude that it is a post-manufacturing expense and not allow the credit.How to counter this stand??

-Shekar R

[Madhukar N Hiregange]

The place of removal being normally the factory gate whether the activity is one post removal is certainly an argument of revenue. However we need to find out whether the manufacture comes before or after the order is sought. Also when amount is paid for promotion/ development of the market and the measure is only the percent age of sale we maybe in a stronger position.

AI Summary

Service tax credit on commission services depends on whether the commission qualifies as an input service used up to the place of removal. Availability of CENVAT credit on commission (sales commission) hinges on whether the commission service qualifies as an input service used up to the place of removal. Assessing eligibility requires factual analysis of timing (pre- or post-manufacture/removal), whether the service constitutes sale-promotion or market development, and how statutory definitions and administrative guidance on input services are harmonised to permit credit.