Credit of service tax on sales commission

[A RAVINDRA]

Ours is a manufacturing unit registered under both central excise and service tax. We have paid sales commission to a company (As per written agreement). We have taken input credit of service tax charged in the sales commission bill raised by company. Departmetnt has written a letter to reverse the credit. Please clarify whther department is right in asking us to reverse the input credit taken by us on sales commission bill charged by our selling agent company.

AI Summary

Manufacturing Unit Challenges Reversal of Service Tax Credit on Sales Commission; Eligibility Hinges on Agreement Scope A manufacturing unit registered under central excise and service tax paid sales commission to a company and claimed input credit for the service tax charged. The department requested a reversal of this credit. Respondents in the forum argue against the department's request, stating that sales commission qualifies as an input service eligible for credit. One respondent specifies that if the commission agreement is solely for securing orders, the credit is valid. However, if it includes money collection, it does not qualify as an input service since it is a post-manufacturing activity.