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2023 (5) TMI 520 - AT - Service TaxDenial of CENVAT Credit - Input services - commission paid by the respondent to collection agents for collection of dues of post-paid plans from the subscribers - HELD THAT:- Rule 2(l) of the 2004 Rules defines “input service” to mean any service used by a provider of output service for providing output service and includes services relating to sales promotion. The Explanation that was added to rule 2(l) on 03.02.2016 provides that for the purpose of clause 2(l), sales promotion includes services by way of sale of dutiable goods on commission basis. The view taken by the Commissioner (Appeals) that the Explanation inserted in rule 2(l) of the 2004 Rules on 03.02.2016 would have retrospective effect is correct. The Calcutta High Court in PRINCIPAL COMMISSIONER OF CENTRAL EXCISE, KOLKATA – IV VERSUS M/S. HIMADRI SPECIALITY CHEMICAL LIMITED [2022 (9) TMI 1213 - CALCUTTA HIGH COURT] held that the Explanation inserted on 03.02.2016 to the definition of input service under rule 2(l) of the 2004 Rules would have restospective effect. This apart, what needs to be noticed is that the view taken by the Joint Commissioner that since the activities in respect of collection /recovery of post-paid plan outstanding dues had been undertaken after completion of the provision of taxable output services they would not be covered in the main part or the inclusive part of the definition of input service is not correct. Rule 2(l) of the 2004 Rules provides that the input service must be used for providing output service. The provider of output service, therefore, shall be eligible to avail CENVAT Credit on all those services which are used for providing output services without which the provision of the said output service would become impossible or commercially inexpedient. What, therefore, follows is that services having relation with the business of providing of output service would be covered by the definition of input service. Thus, it has to be held that the respondent was entitled to avail CENVAT Credit of service tax discharged on the commission paid by the respondent to collection agents for collection of dues of post-paid plans from the subscribers. Appeal of Revenue dismissed.
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