TaxTMI 
TaxTMI 
2026 (3) TMI 1061
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....t to market all or any of the machines and attachments, including various hydraulic equipment including custom engineered systems and applications thereof. Alleging that the said activity of sale agency carried out by appellant is not an input service, proceedings were initiated under the provisions of Rule 3 of CENVAT Credit Rules, 2004 r/w Rule 2(1) ibid. Show cause notice dated 04.03.2009 was issued for the period of from 2006-2007, 2007-2008. Subsequently periodical show cause notices were issued covering the period from January, 2009 to March, 2015. Thereafter Adjudication Authority confirmed the demand against each show cause notice. Aggrieved by each order, appeals were filed before this Tribunal and this Tribunal vide Final Order No. 20273-20280/2022 dated 10.08.2022 upheld the order and rejected the appeals of the Appellant. The Appellant challenged the Final order of this Tribunal before the Hon'ble High Court of Karnataka and Hon'ble High Court of Karnataka vide judgment dated 11.03.2025 has remanded the matter for fresh consideration on the ground that substratum of the said Final Order namely the judgment of the Hon'ble High Court of Gujarat relied by the Tribunal in t....
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....oaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal;" 3.1. From the above definition, it is clear that to qualify as input service, the fundamental criteria is that the service has to be used by the manufacturer in or in relation to the manufacture of final products. In the instant case, appellant has provided the services as a sole selling agent to the appellant which include identifying the prospective customers, taking and forwarding the orders from the customers, collection of payment from the customers, etc. In this regard, Learned Counsel draw our attention to the agreement dated 15.03.1999 and as per Article 2 of the agreement, with respect of sale of equipment in Territory 'A', manufacturer appointed appellant as its exclusive agent to market the equipment and to provide product support for the equipment. Learned Sr. Counsel also draws our attention to the Article 3 of the agreement dated 15.10.2007 where agent commission, prices and other conditions are prescribed. The Learned Counsel further submits that demands on the very same grou....
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.... Commission paid to the Appellant's Sole Selling Agents for the period April 2015 to March 2016. 3.2. Since, the Revenue accepted the above said finding of the Commissioner (Appeals), the issue is no more res-integra. 4. The Learned Sr. Counsel also draws our attention to the decision of the Tribunal in Appellant's own case M/s. Larsen & Toubro Ltd. Vs. Commissioner of Central Excise, Mumbai (2016 (46) STR 422 (Tri. - Mumbai) where it is held that:- "5. We have carefully considered the submissions made by both the sides. We have also perused the agreement entered into between the appellant and M/s. L & T Komatsu Ltd. and the said agreement is called as "marketing agreement". As per the agreement, the appellant has been employed as an agent or a distributor of M/s. L & T Komatsu Ltd. in specified territory. Article 2.1 of the agreement states that "with respect to sales of equipment in territory A, L & T Komatsu hereby appoints L & T as its exclusive agent to market the equipment and provide product support for the equipment and L & T accepts such appointment". As per the Article 3.1, for the services rendered by L & T towards sales and service o....
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....ection of Sales consideration on behalf of M/s. L&T Komatsu. Appellant was maintaining different offices and sales personnel all over India for carrying the marketing activities. 6. Learned Sr. Counsel further draws our attention to the Circular No.943/4/2011-CX dated 29.04.2011 where clarification regarding CENVAT Credit Rules were issued. As per the said explanation, as regarding the credit of Business Auxiliary Services (BAS) on account of sales commission, it is clarified that the definition of input services allows all credit on services used for clearance of final products upto the place of removal. Moreover, activity of sale commission is specifically allowed and on many occasion, the remuneration for sale is linked to actual sale. Reading the provision harmoniously it is clarified that credit is admissible on the services of sale of dutiable goods on commission basis. Further as per Circular No. 96/85/2015-CX-I dated 07.12.2015, it is further clarified that:- "B.30 - Meerut Zone - Cenvat Credit Admissibility of Cenvat Credit on Service Tax Paid on Sales Agency Commission Service: Issue: C.B.E. & C. vide its Circular No. 943/4/2011CX., dated 29-4-2....
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....he sales commission agent involves an element of sales promotion". 7. Learned Sr. Counsel further draws our attention to the Notification No.2/2016-CE NT dated 03.02.2016 where explanation is provided in Rule 2 in Clause 1 after Clause C. Explanation-for the purpose of this clause, sales promotion includes sales by way of sales of dutiable goods on commission basis. The Learned Counsel also submits that the issue was considered by this Tribunal in the matter of M/s. Federal Mogul TRP (India) Ltd. Vs. Commissioner of Central Tax, Bangalore North - 2020 (11) TMI 893 - CESTAT Bangalore where it is held that:- "6. After considering the submissions of both the parties and perusal of the material on record, we find that the only issue involved in the present appeals is viz denial of CENVAT credit availed on sales commission paid to sister concern Mis. FMGIL for promoting sales and denial of CENVAT credit on service tax paid on outward transportation from factory to buyer's premises during the period from April 2008 to April 2010 Before, we proceed to decide the question involved, it is pertinent to quote the relevant provisions of CENVAT Credit Rules, 2004 per....
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....on covering the period January 2015 to February 2016. We also note that the Board vide Circular No.96/85/2015-CX dated 7.2 2015 has clarified that decision in the case of Cadila Healthcare Ltd. cited supra applies in case where the agent is undertaking only sales and no sales promotion. Whereas in the present case, it is clearly evident from various terms and conditions contained in clause (3) of the Agreement that M/s. FMGIL undertakes the activity of sales promotion. Hence, we hold that the decision in the case of Cadila Healthcare Ltd. is not applicable in the present case. This issue is no more res integra and has been settled in favour of the assessee in various decisions cited supra wherein it has been consistently held that sales commission fall under definition of 'input service By following the ratio of the above said decisions, we hold that denial of CENVAT Credit on sales commission is not sustainable in law". 8. Learned Sr. Counsel also draws our attention to the judgment of the Hon'ble High Court of Bombay in the matter of M/s Coca Cola India Pvt. Ltd. Vs. Commissioner of C. Ex., Pune - III - 2009 (15) S.T.R. 657 (Bom.) where the issue is considered and he....
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....is held that:- "8. The Tribunal while affirming the order of Commissioner (Appeals) and adjudicating the issue in favour of the respondent had come to the conclusion that the activities in respect of which cenvat had been filed, were pre-removal activities and the same could not be held to be post-removal. It was further observed that canvassing and procuring orders were in relation to 'sales promotion' and would fall under sales promotion activities. These activities were, thus, included in the definition of input services and the assessee was entitled to benefit of cenvat credit of service tax. It would be advantageous to notice here the findings recorded by the Tribunal in para 6 of its order". 12. As regards the demand confirming invoking the extended period of limitation, Learned Sr. Counsel draws our attention to the decision of the Tribunal in the matter of The Commissioner of Central Goods & Service Tax, Jaipur Vs. M/s. Bharti Hexacom India Ltd - 2023 (5) TMI 520 - CESTAT New Delhi and submits that there is no allegation regarding suppression of facts to invoke extended period of limitation. 13. Learned Special Counsel (AR) appearing for t....
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....rvice under rule 2(l) of the cenvat credit rules through it includes advertisement or sales promotion, it is applicable to the services availed by the manufacturer for advertisement. Sales promotion would also get covered under the ambit of input service as defined under rule 2(l). But the services provided by M/s. L&T to the appellant are not advertisement or sales promotion. As the services in question are neither advertisement nor sales promotion, they are not covered under the inclusive part of the definition of input service as claimed. Therefore, it does not qualify as an input service to the manufacturer on this count too. If it is not an input service, availment of credit on the same is irregular. The law does not permit the manufacturer to take credit of the service tax paid on all services, but only on the input services. Learned Senior AR further submits that that the amounts spent by appellant during the subject period for advertisement is only a very small percentage of the commission received by them from the manufacturer. It works out to less than 2.5% of the commission received. Learned Special Counsel (AR) also draws our attention to the judgment of the Hon'ble Hig....