The Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) held that the assessee is eligible to get cenvat credit for the amount of service tax paid on commission of sale of flats.
Assessee, M/s Krishi Icon, is engaged in providing the “construction of residential complex services, real estate agent services and business support services”. During the relevant assessment year, the department took a view that the assessee wrongfully availed cenvat credit on “commission/brokerage on sale of flats” as the said commission agents were concerned with sale but not related to promotion of their goods, as such their activity was not related to any activity specified in the inclusive part of the definition of input service provided under Rule 2 (l) of Cenvat Credit Rules, 2004.
Upholding the first appellate authority’s order favouring the assessee, the Tribunal noted that the Explanation to Rule 2 (l) of Rules 2004 says it in clear terms that there is no bar on availment of Cenvat credit on sales promotion service by way of sale of dutiable goods on commission basis.
“During the period from 2008 onwards this issue has been considered by various appellate authorities and the Board has also issued clarification vide Circular dated 29/04/2011 specifically under point No. 5 which 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.”To Read the full text of the Order CLICK HERE