L & T Constructions Equipment Ltd Vs Commissioner of Central Tax (CESTAT Bangalore)
CESTAT Held that services of sales commission service don’t qualify as input service and accordingly Cenvat Credit on the same not available.
Facts-
During the course of an investigation, it was observed that the appellants were availing credit of service Tax on the sales commission paid by them to M/s L&T Ltd, who were marketing their products in India, as per Sole selling Agreement entered in to with them; It appeared that the activity of sales agency carried out by M/s L&T is not an input service and that the appellants have contravened the provisions of Rule 3 of CENVAT credit Rules, 2004 read with Rule 2(l) ibid.
The allegations in the Show Cause Notice were confirmed by Order-in-Original dated 26-02-2010.
Conclusion-
We find that in the case of Cadila Healthcare Ltd., Hon’ble High Court of Gujarat has gone into all the legal issues involved and have come to a categorical conclusion.
Based on the judgement of Cadila Healthcare Ltd., it was held that that the appellants are not eligible to avail CENVAT credit on the Sales Commission paid to M/s L&T Ltd.
FULL TEXT OF THE CESTAT BANGALORE ORDER
The appellants M/s L& T Construction Equipment Limited (earlier known as M/s L&T Komatsu Limited) are engaged in the manufacture of hydraulic excavators; During the course of an investigation conducted by the Department it was observed that the appellants were availing credit of service Tax on the sales commission paid by them to M/s L&T Ltd, who were marketing their products in India, as per Sole selling Agreement entered in to with them; It appeared that the activity of sales agency carried out by M/s L& T is not an „input service‟ and that the appellants have contravened the provisions of Rule 3 of CENVAT credit Rules, 2004 read with Rule 2(l) ibid; A show Cause Notice dated 04.03.2009, covering the period 2006-07 and 2007-08, was issued invoking the extended period, seeking to demand back the credit taken along with interest while proposing to levy penalty. The allegations in the Show Cause Notice were confirmed by Order-in-Original dated 26-02-2010. Thereafter periodic Show Cause Notices were issued and confirmed by the respective Orders-in-Original/Orders-in-Appeal as follows.
