2016 (4) TMI 232 - AT - Service Tax

CENVAT Credit sale promotion activities - Beneficial amendment to Rule 2(l) vide notification no. 2/2016 CE(NT) dated 3.2.2016 is retrospective or prospective - sales promotion includes services by way of dutiable goods on commission basis - denial of claim as the services were received and utilized by the Appellant for selling of the goods and not in relation to the manufacture of the goods and clearance of the final product from the place of removal, which could not be considered as “input service” as defined under Rule 2(l) of the Rules, 2004.

Held that:- The definition of the 'input services' includes services used in relation to 'sales promotion' and these activities can rightly be described as sales promotion activities. Sales promotion activities undertaken at given point of time also aims at sales of goods which are to be manufactured and cleared on future. Any advertisement given as a long term impact cannot be treated as post- clearance activities and, therefore, sales promotion has been specifically included in the definition of input services.

As regards the other contention that the documents on which the respondent has taken the credit is not the prescribed document, it is to be noted that the respondent is not a service provider per se. They are basically the service recipients. They are required to pay service tax as a deemed service provider. Revenue was unable to justify that the claim of cenvat credit by the assessee was erroneous in any manner.

Hon'ble Supreme Court in the case of CIT Vs Podar Cement (P) Ltd - [1997 (5) TMI 2 - SUPREME Court] observed that the circumstances under which the amendment was brought in existence and the consequences of the amendment will have to be taken care of while deciding the issue as to whether the amendment was clarificatory or substantive in nature and, whether it will have retrospective effect or it was not so. In the present case, the Explanation inserted in Rule 2(l) of Rules 2004, is in conformity with the Board Circular dt.29.04.2011, and extended the benefit to the Assessee

The Hon'ble Supreme Court in the case of Vatika Township Pvt. Ltd. [2014 (9) TMI 576 - SUPREME COURT], in the identical situation, held that if a legislation confers a benefit on some other person or on the public generally, and where to confer such benefit appears to have been the legislature’s object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect.

Cenvat Credit allowed - Decided in favour of assessee