Recently, minutes of Tariff Conference held on 28th and
29th October, 2015-reg. was released by CBEC under Instruction No.
F.No.96/85/2015-CX.I dated 07.12.2015.
CBEC has released this compliation which consists of various
issues that has cropped through out different Commissionerates and
discussions cum decisions taken on them accordingly
Amongst various discussions, Meerut Commissionerate has
dealt with the issue of Sales Agency Commission Service as below:
B.30 – Meerut Zone – Cenvat Credit
– Admissibility of Cenvat Credit on Service Tax Paid on Sales
Agency Commission Service:
Issue: CBEC vide its Circular No.
943/4/2011-CX dated 29.04.2011 at point No.5 has clarified that
credit of service tax paid on sales commission services (Business
auxiliary services) used in 28 relation to manufacture/sale of
finished goods is admissible under Cenvat Credit Rules, 2004.
However, there are conflicting judgments of Hon'ble High Courts
in this regard. Hon'ble High Court of Gujarat in case of Cadila
Health care [2013(030) STR 0003] has disallowed the said Cenvat
credit whereas Hon'ble Tribunal in case of Birla Corporation
Ltd – [2014(35) STR977] followed the judgment of Hon'ble
High Court of Bombay and allowed the credit. Board may be requested
by the conference to issue necessary clarification on the subject
to avoid further litigation and to achieve uniformity in the
practice of assessment.
Discussion & DecisionThe
conference discussed the issue in detail and the facts of both the
cases where apparently conflicting judgments have been delivered.
It was noted that the judgment of Hon'ble High Court of Gujarat
was in a very specific set of circumstances where the sales
commission agent seemed to be only trading in the goods i.e. buying
and selling the goods without undertaking any sales promotion or
advertising. In the said judgment, Hon'ble Court noted that
"there is nothing to indicate that such commission agents were
actually involved in any sales promotion activities as envisaged
under the said expression. Obviously, commission paid to the
various agents would not be covered in this expression since it
cannot be stated to be a 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". Board Circular No.
943/4/2011-CX., dated 29.4.2011 at point no 5 on the other hand has
explained the situation where the commission agent renders the
service of sales promotion in following words – ".......
Moreover the activity of sale promotion is specifically allowed and
on many occasions the remuneration for same is linked to actual
sale....... " . Board circular directs thatinput
service credit would be available when there is a element of sales
promotion as sales promotion is a service. Thus, the conflict
between the judgment and the circular is not as large as is
perceived. Both the Board circular and case laws on the
subject allow credit of input services, when the activity of the
sales commission agent involves an element of sales
This is an interesting discussion cum decision of Meerut
Commissionerate. It is pertinent to note that this is
binding on each and every commissionerate in as much as it has been
accepted by CBEC and accordingly released by CBEC
Further , the issue is pending before the Honourable Apex Court
and except the HC of Gujarat in the matter of Cadila et. al ,
almost every other HC have taken a decision in favour of an
Therefore, the aforesid decision and discussion during
such a conference and released by CBEC by taking cognisance of HC
orders and previous CBEC instruction , should be also brought by
the assesees who have their case pending before the Apex Court .
Let us hope that the Aex court might also consider this as a vital
ground in allowing the cenvat credit before finally disposing the
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