TaxTMI 
TaxTMI 
2023 (5) TMI 520
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.... services. 3. The respondent also availed CENVAT Credit of the service tax paid on the commission amount. 4. The Department, however, believed that as the service of collection of dues of the post-paid plan had not been used by the respondent for providing "output" services as it had been used after completion of the provision of output service, it would not qualify as an "input" service for the provision of telecommunication service. A show cause notice dated 27.01.2016 was, accordingly, issued to the respondent. The respondent filed a reply pointing out that in view of the definition of input service under rule 2(l) of the CENVAT Credit Rules, 20042, all services which are used for providing the output service would qualify as input service. It was also pointed out that the agents appointed by the respondent for collection of the dues of postpaid plan perform a service which is integral to the provision of output service in as much as they undertake collection of revenue without which the respondent will not be in a condition to continue to provide output services. 5. The Joint Commissioner, however, by order dated 27.01.2017 disallowed CENVAT Credit and also imposed penalty. ....
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....product, convince them to buy and procure orders. His activities are entirely related to sales promotion. Without services of commission agents, it is very difficult to sell SERVICES. I observe that the clarification issued by the Board vide its circular No.943/4/2011-CX dated 29.04.2011 specifically, under point No. 5, contains the wording that "...Moreover activity of sales promotion is specifically allowed and on many occasion the remuneration for same is linked to actual sale. Reading the provisions harmoniously it is clarified that credit is admissible on the services of sales of dutiable goods on commission basis." From this clarification itself it is understood that if a commission agent is paid commission on account of sales of goods, his services are qualify to be input service and cenvat credit of service tax paid on such service is admissible to the recipient of service. I find that the issue stand settled after the said clarification itself. I find that Hon'ble Tribunal in the case of CCE Jallandhar Vs. Ambika Overseas reported in 2010 (20) STR 514 (Tri.-Del.) hold that the subject activity of commission agent is a service used in relation to sales promotion and is ....
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.... the Cenvat Credit Rules, 2004, as such the appellant - service providers were entitled to avail the subject credit and the same has been correctly availed. I therefore, find it proper to set aside the impugned order disallowing the credit and ordering for recovery of the same alongwith interest. Consequently, imposition of penalties becomes void. " (emphasis supplied) 7. Shri Harshvardhan, learned authorized representative appearing for the department submitted that the Commissioner (Appeals) committed an error in holding that the Explanation added to Rule 2(l) to the 2004 Rules would have retrospective effect for the simple reason that it would come into force only on the date of publication in the official gazette. 8. Shri B.L. Narasimhan, learned counsel appearing for the respondent assisted by Ms. Poorvi Asati, however, submitted that the respondent committed no illegality in availing CENVAT Credit for the reason that the service of collection of post- paid dues rendered by the collection agents to the respondent would be covered under the "means" part of the definition of "input" service. His submission is that a provider of output service is eligible to avail CENVAT Cr....
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....09.2022 held that the Explanation inserted on 03.02.2016 to the definition of input service under rule 2(l) of the 2004 Rules would have restospective effect and the relevant portion of the judgment is reproduced below:- " 10. xxxxxxx Further, on and after the insertion of the explanation in Section 2(1) vide notification dated 03.02.2016, the position has become much clearer. The explanation seeks to clarify the intention of the legislature with a view to extend the benefit of credit on services of commission agent as was indicated in the circular dated 29.04.2011 which is to the following effect. B.30 - Meerut Zone - Cenvat Credit - Admissibility of Cenvat. 11. As could be seen from the above clarification, the decision in Cadila Health Care was also taken note of by the department and the position stood clarified that sales promotion would include services by way of sale of goods on commission basis. As pointed out by the Hon'ble Supreme Court in Commissioner of Income Tax Vs. Vatika Township Private Limited MANU/SC/0810/2014 : (2015) 1 SCC 1 that if a legislation confers the benefit on some persons but without inflicting the corresponding detriment on some other ....
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....n the inclusion part of the definition as one of the input service. We find that the vehicle on which the appellant have given the loan is hypothecated with the appellant as the security. Therefore in connection to the recovery of the loan this vehicle is taken under repossession, therefore this service is clearly covered under the definition of "Security" which means "a thing deposit or pledged as a guarantee of the fulfilment of an undertaking or the repayment of the loan, to be forfeited in case of default. In view of this definition the service of taking repossession of the vehicle from the borrower is a part of security service which is specifically included in the definition of input service. For this reason also the service of repossession provided by the recovery agent to the appellant is an input service. Therefore the appellant is clearly entitled for the Cenvat credit on such input service. However it is observed from the submission of the Ld. Counsel that the amount of recovery charges was recovered by the appellant from the individual borrowers at the time of giving repossession of the vehicle in case the borrower has repaid the amount. In this regard the proceedings r....