service tax credit on commission paid domestic and export

[Guest]

dear sir

till today i was finish excise audit for last 1 year period.

now my question is can we avail service tax credit on sales commission paid against domestic and export sales. ?

thanking you in advance

@Bharat Patel

[Vinay Sharma]

Dear Mr. Bharat,

The sales commission is not specifically covered in definition of Input Service. As far as inclusive part is concerned it has been held by Gujrat High court in the case of Cadila Health Care Ltd. that it is not covered in input service.

Kindly refer the judgement as given below.

2013 (1) TMI 304 - GUJARAT HIGH COURT

Other Citation: 2013 (30) S.T.R. 3 (Guj.) , [2013] 59 VST 386 (Guj)
COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD - II versus M/s CADILA HEALTH CARE LTD.
Tax Appeal No. 353 of 2010 and Tax Appeal No. 204 of 2011

[Rajagopalan Ranganathan]

Dear Shri. Patel,

Service of Commission agent are in the nature of sales promotion and hence eligible as input service vide P and H High Court's judgment in the case of CCE vs. Ambika Overseas 2012 (25) S.T.R. 348 (P and H). = 2011 (7) TMI 980 - PUNJAB & HARYANA HIGH COURT

Para 5 of CBEC's circular No. 943/04/2011-CX dated 29.4.2011 has specifically clarified that den under new definition of input service, service tax on sales commission is eligible as input service.

 

[YAGAY andSUN]

Dear Bharat,

The Punjab and Haryana High Court judgment was pronounced by the Single Member Bench whereas Gujarat High Court Judgment was pronounced by the Double Member Bench, therefore, Gujarat High Court has the more weightage and would be applicable. Further, For exports you can avail the exemption to the extent of 10% of the commission so paid.

Regards

YAGAYand SUN

(Management, Business and Indirect Tax Consultants)

[Mahir S]

The views dated 25.01.15 posted above are correctly stated.

AI Summary

Service tax credit on sales commission: conflicting rulings create uncertainty over eligibility for input service credits. Whether service tax credit is available on sales commission for domestic and export sales is contested. One authoritative decision finds sales commission outside the definition of input service and disallows credit, while another decision and an administrative circular treat commission as eligible input service. Commentators highlight the conflict between differing benches and note limited administrative relief for export commissions, producing legal uncertainty for taxpayers claiming credit on commissions.