2010 (12) TMI 898 - AT - Service Tax

Whether the services of business auxiliary service received by the respondent from the commission agents appointed abroad can be treated as their input service - service received by the respondent is of commission agent appointed by them abroad who secure the export orders from them - Held that - service of commission agent is a service of the sale promotion and would be covered by the definition of input service . In any case the activities relating to business are also covered by the definition of input service and the service received from the agents for securing export orders would certainly cover by the term activity relating to business there is no infirmity in the impugned order stay application is dismissed.

Summary

Issues:
1. Stay application filed by the department regarding Cenvat credit eligibility for service tax paid on services of securing export orders.

Analysis:
The case involved a dispute over the eligibility of a manufacturer of pipe fittings to claim Cenvat credit for service tax paid on services provided by commission agents appointed abroad for securing export orders. The Assistant Commissioner had denied the credit, imposing a penalty, but the Commissioner (Appeals) set aside this decision. The department filed a stay application against the order-in-Appeal No. 172/CE/LDH/2010. The main contention was whether the services of commission agents could be considered as input services under Rule 2(1)(d) of the Service Tax Rules, 2004. The department argued that the services were not related to advertisement or sale promotion, emphasizing that the commission agents only secured export orders. Despite the respondent not appearing, their opposition to the department's appeal was noted, asserting a strong case on merit.

The Tribunal, after hearing the arguments, analyzed the definition of 'input service' under Rule 2(l) of the Cenvat Credit Rules, 2004, which includes "advertisement or sale promotion services." The service in question was provided by commission agents appointed abroad to secure export orders. The Tribunal opined that the service of commission agents could be categorized as a form of sale promotion service, falling within the ambit of 'input service.' Additionally, the activities related to business were also considered under the definition of 'input service,' further supporting the inclusion of services for securing export orders. Consequently, the Tribunal found no fault in the order-in-Appeal and dismissed the stay application, indicating a prima facie view that the impugned order was valid and did not warrant interference.