TaxTMI 
TaxTMI 
2013 (5) TMI 162
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.... the ld. AR argued that sales commission paid is an activity relating to their business incurred before the clearance of goods because on the basis of orders procured by the commission agent, clearances are made. 4. After hearing both the sides, it is seen that in the order of the Hon'ble High Court of Gujarat in the case of Cadila Healthcare, in para 5.2., the issue was deliberated in detail as follows: "5.2 Commission paid to the foreign agents: The assessee availed of CENVAT credit of Rs.39 ,45,79 /- towards commission paid to foreign agents. According to the assessee, out of the total amount paid as service tax, they had availed of CENVAT credit only on that part which was attributable to dutiable products manufactured in their plant only and that no CENVAT credit has been availed on exempted goods. It was contended that service tax paid on commission paid to commission agents for sale of final product is available as credit according to the inclusive part of the definition of 'input service', which includes services in relation to sales promotion. Reference was made to the definition of business auxiliary service as defined under section 65(19) of the Financ....
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.... carried out by the commission agent do not fall within the ambit of sales promotion and therefore, also the commission paid to the foreign agents would not fall within the ambit of the expression 'input service, as envisaged under rule 2(l) of the Rules. (iv) On the other hand , the learned counsel for the assessee supported the impugned order of the Tribunal by submitting that the assessee avails of services of commission agents for sale of its final products. The commission agents find buyers for the assessee's goods and thereby promote the sales of the assessee's goods. The 'includes' portion of the definition specifically mentions services used in relation to sales promotion. The service of commission agents is, therefore, covered by the definition of input service. Moreover, such service is received in relation to the assessee's business only and not for any other purpose. The same is therefore, a service in relation to the activity relating to business which is also covered by the 'includes' portion of the definition. It was argued that the show cause notice had proposed to deny CENVAT credit merely on the ground that the said service is a post-manufacturing ....
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....ion is as to whether services rendered by a commission agent can be said fall within the ambit of expression 'sales promotion'. It would, therefore, be necessary to understand the meaning of the expression 'sales promotion'. (vii) The expression 'sales promotion' has been defined in the "oxford Dictionary of Business" to mean an activity designed to boost the sales of a product or service. It may include an advertising campaign, increased pR activity, a free-sample campaign, offering free gifts or trading stamps, arranging demonstrations or exhibitions, setting up competitions with attractive prizes, temporary price reductions, door-to-door calling, telephone selling, personal letters etc. In the "Oxford Dictionary of Business English" sales promotion has been defined as a group of activities that are intened to improve sales, sometimes including advertising, organizing competitions, providing free gifts and samples. These promotions may form part of a wider sales campaign. Sales promotion has also been defined as stimulation of sales achieved through contests, demonstrations, exhibitions or trade shows, games, giveaways, point-of-sale displays and merchandising, sp....
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....o the various agents would not be covered in this expression since it cannot be stated to be 1 service used directly or indirectly in or in relation to the manufacture of final products or clearance of final products from the place of removal. The 'includes' portion of the definition refers to advertisement or sales promotion. It was in this background that this court has examined whether the services of foreign agent availed-by the assessee can be stated to services used as sales promotion. In the absence of any material on record, as noted above to indicate that such commission agents were involved in the activity of sales promotion as explained in the earlier portion of the judgement, in the opinion of this court; the claim of the assessee was rightly rejected by the Tribunal. Under the circumstances, the adjudicating authority was justified in holding that the commission agent is directly concerned with the sales rather than sales promotion and as such the services provided by such commission agent would not fall within the purview of the main or inclusive part of the definition of input service as laid down in rule 2(l) of the Rules. (ix) As regards the content....