TaxTMI 
TaxTMI 
2026 (7) TMI 1186
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....entral Excise Tariff Act, 1985. In accordance with the principle of value addition, the Appellant availed CENVAT Credit of various inputs, capital goods and input services and utilized the same for payment of excise duty. 2.1. The Appellant entered into agreements with various commission agents for procuring orders for sale of their finished goods on payment of a sum being 'sales commission' Accordingly, during the underlying period invoices were issued by such commission agents for charging sales commission, along with service tax thereon. Based on such invoices, the Appellant availed CENVAT Credit of the service tax so paid by the commission agents since the said activity was used for the purpose of business and squarely fell within the ambit of definition of 'input service' under Rule 2(l), being 'sales promotion' services. Beyond the sales commission agreements, the Appellant also entered into agreements with such commission agents for procuring various other input services like godown rental for storage, handling charges for carriage as well as maintenance work. 2.2. During EA-2000 audit of the financial records of the Appellant viz., the Balance Sheet, P....
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....ces was availed despite knowledge of the same being ineligible 2.5. Aggrieved against the disallowance of Cenvat credit along with interest and penalty, the Appellant has filed this appeal. 3. The submissions made by the Appellant are summarized below: THE ISSUE IS NO LONGER RES-INTEGRA. CENVAT CREDIT IS ELIGIBLE ON SALES COMMISSION EXPENSES SINCE THE AMENDING NOTIFICATION IS RETROSPECTIVE IN OPERATION. A.1 The instant proceedings were initiated against the Appellant based on the allegation that the expenses incurred by the Appellant were in the form of sales commission for which CENVAT credit under Rule 2(l) of the Credit Rules is not eligible. A.2 In this regard, it is submitted that vide Amending Notification it was clarified that sales commission was included in sales promotion under Rule 2(l) of the Credit Rules. The explanation inserted is reproduced herein below for ease of reference - "Explanation - For the purpose of this clause, sales promotion includes services by way of sale of dutiable goods on commission basis." A.3 The aforesaid explanation was inserted as a clarification, and as a result of which, sale of goods on commiss....
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.... the Hon'ble Gujarat High Court in Cadila Healthcare (supra) is no longer a good law, having been reversed by the Hon'ble Supreme Court. The Appellant submits that the entire proceedings were initiated against the Appellant based on the decision in Cadila Healthcare (supra) wherein it was held that services provided by commission agent do not fall within the scope of input services under Rule 2(l) of the Credit Rules. However, the said in Cadila Healthcare (supra) is no longer a good law since the matter back to the Hon'ble CESTAT. Hon'ble Supreme Court in Zydus Lifesciences Limited v. CCE, Ahmedabad - II - 2024 (80) G.S.T.L. 338 (S.C.) set aside this decision and remanded 5. Accordingly, the Appellant submits that the disallowance of credit availed by the Appellant on sales commission, is legally not sustainable and hence the Appellant prayed for setting aside the same. 6. The Ld. A.R. reiterated the findings in the impugned order. 7. Heard both sides and perused the Appeal documents. 8. We have gone through the records of the case. We find that the issues to be decided in this appeal are: (i) Whether CENVAT credit of service tax paid is eligible on sales commiss....
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....credit is not eligible on sales commission expenses. The relevant portion of the decision is extracted below - "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 v. Vatika Township Private Limited [(2015) 1 SCC 1] that if a legislation confers the benefit on some persons but without inflicting the corresponding detriment on some other person or on the public generally, and where to confer such benefit appears to have been the object of the legislature, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. In Commissioner of Income Tax v. Archean Granite Private Limited [(2020) 117 taxmann.com 977 (Madras)] amendment made to Section 40(a)(ia) of the Finance Act, 2010 inserting proviso therein was held to be retrospective with effect from the assessment year 2005-06 and the Court followed the decision in the case of Co....