CENVAT credit on service tax paid by commission agent

[Yatin Bhopi]

We have a parent company and affiliates in USA and other countries. We find buyer in India, negotiate price, follow up for payments for our parent company and affiliates and get commission.

Likewise overseas affiliates also under take similar activity for us.

After amendment in definition of ‘intermediary’ vide notification No 14/2014-ST / 11.07.14 commission agent of goods included in definition of intermediary. Now as per Rule 9 of POPSR 2012 place of provision of service is location of service provider hence where we are providing service to USA we are liable to pay service tax.

My query is: Are we eligible to avail CENVAT credit on service tax charge in the bill and paid to the govt?

2- Since our main activity is the manufacturing, all input services credit related to manufacturing activity is used towards payment of excise duty only, can we use this input service credit for discharging the liability against service tax payable on Indenting commission?

[YAGAY and SUN]

Dear Yatin,

In many Tribunal decisions (upheld by PandH High Court), it was well settled that Cenvat credit of service tax paid on service of Commission Agent is eligible as input service.

However, the well settled issue has been disturbed by decision of Gujarat High Court in CCE v. Cadila Healthcare (2013) 59 VST 386 (Guj HC DB) = 2013 (1) TMI 304 - GUJARAT HIGH COURT where it has been held that service of commission agent is not eligible as input service.for purpose of Cenvat credit.

Though the assessee company has filed appeal before Supreme Court, the decision of Gujarat High Court stands, unless stay is granted.

This is for your kind information.

Regards

Team YAGAY and SUN

(Management and Indirect Tax Consultants)

 

AI Summary

CENVAT credit eligibility on commission agent services remains uncertain due to conflicting rulings, pending appeal.
Whether CENVAT credit is available for service tax on commission agent services (now within the intermediary definition) is disputed: tribunal precedents treated such services as eligible input service, but a subsequent high court decision denied eligibility; an appeal is pending and the adverse high court decision governs unless stayed, creating uncertainty about claiming and utilising input service credit against service tax on commission/indenting activity.