TMI Blog2016 (1) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax was paid under reverse charge method - Held that:- Revenue had issued a clarification to the appellant in their letter dt. 3.10.2012 to the appellant that they are eligible for cenvat credit on the service tax incurred and paid by the appellant on brokerage charges. We also find support from the Government advertisement issued by CBEC after the introduction of negative list wherein the Board has categorically clarified that service tax paid on the brokerage commission by Mutual Fund and Asset Management Companies is available as credit for paying service tax on their output services. This advertisement was issued consequent on withdrawal of service tax exemption on brokerage commission w.e.f. 1.4.2015. Therefore, it is evident that when there was no exemption for service tax, the Board had categorically clarified that assessees have to pay service tax under reverse charge and they are eligible for availing credit. - Credit allowed. Duty paying documents - validity - Held that:- respondent is entitled to avail credit of service tax on the basis of credit of service tax on the basis of TR-6 challan. Appellants are eligible for taking credit on the service tax paid by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 and 8.12.2015. 4.1 On the issue of denial of cenvat credit availed on the advertisement charges, he submits that adjudicating authority denied cenvat credit on the ground that they have acted as pure agent. He drew our attention to para-5 of SCN at page 33 of the paper book where the department has denied credit on two allegations viz. Appellant acted as pure agent and the amount reimbursed by them is not included in the taxable value and availed double benefit by non-inclusion of amount in the taxable value as well as availment of credit. He submits that advertisement charges incurred by them was not reimbursed from their principal as pure agent and these advertisement charges is over and above the prescribed limit of 6% imposed by SEBI. He submits that department has not disputed the payment of service tax by appellant on the advertisement charges incurred by them but only objected for taking credit. He relied Investment Management Agreement enclosed in the typed set and various clauses thereto. He referred to clause (6) (at page 14 of the paper book) under the head Remuneration and Expenses . Ld. counsel submits that what they have collected from the principal as consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and non-statutory advertisement for the purposes of availing the credit of the service tax. 4.2 On limitation, he submits that OIO traverses beyond the scope of SCN as allegations made in the SCN is that appellants have not included the reimbursement amounts in the transaction value and also taken double benefit by availing cenvat credit whereas in the adjudication order, the Commissioner has held that appellant failed to submit Investment Management Agreement dt. 27.8.2003. It was alleged that even if conceded that credit details were already furnished, appellants have not submitted the agreement and it was unearthed only after audit conducted by the department. Ld. Counsel Submits that there was no suppression in this case where they were asked by the audit query and they submitted copy of the agreement and the whole situation is only revenue-neutral in nature and the scheme of arrangement or scheme of agreement between the appellant and SMF is regulated by SEBI regulations and hence there is no suppression. He submits that decision in the case of Maruti Udyog relied by the adjudicating authority is not acceptable as it relates to inputs used in the manufacture of final p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roduct and the appellant is not a manufacturer of final product. That Tribunal's decision was reversed by Hon'ble Bombay High Court in the judgement cited supra and therefore it is squarely applicable to the present case. He relies the judgement as the advertisement is on the mutual fund incurred by appellant. ST/42452/2013 7. Ld. Advocate submits that service tax is payable on commission paid to the brokers as brokerage charge and service tax was paid by them under reverse charge mechanism and have rightly availed credit. He referred to para-9 of OIO where the Adjudicating authority denied the credit on three grounds viz. (i) that appellants have reimbursed the entire amount from SMF (ii) that brokerage paid to distributors is not an eligible input service for providing output service i.e. Asset Management Services and (iii) that documents on which service tax credit availed is not valid document as per Rule 9 (e) of CCR,2004. He submits that the adjudicating authority himself categorically accepted the fact at para-10.6 of his order that they have not reimbursed the commission paid to the brokers/distributors from SMF. Regarding input service, he drew our attentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of cenvat credit. Further, he relied letter dt. 3.10.2012 issued by Commissioner LTU, Chennai to appellant where they have clearly informed the appellant that service tax paid on brokerage charges for distribution incurred and paid by the Asset Management Company from the Management Fee received by them from the Mutual Fund can be taken as cenvat credit. In spite of this clarification issued by the Commissionerate, adjudicating authority denied cenvat credit on brokerage/commission paid. 8. Ld. A.R for Revenue reiterated the findings of OIO and relied Clause 5 of the Investment Management Agreement where various obligations of the appellant have been clearly spelt out. Nowhere in the obligation, appellant mentioned why they have to carry out any activity on the marketing. Therefore, it is not an 'input service' for the output service i.e. Asset Management Service. She relied the case law of Tribunal's decision in the case of Raj Ratan Castings Pvt. Ltd. Vs CCE Kanpur - 2012 (25) STR 481 (Tri.-Del.). She submits that report of newspaper cutting will not have the effect of finding of the adjudicating authority. 9. We have carefully considered the submissions of bot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.1.3 Implement the specific Scheme in all respects including the allotment and the issue of Unit Certificates to the investors who are successful in getting the Units allotted to them as per the terms of the concerned Scheme and collect the subscriptions/sale proceeds of Units. ... ... 3.1.10 take all steps to protect the investments made out of the Fund and achieve objectives of each Scheme as a diligent and prudent person would do. ... ... 3.1.13 keep or cause to be kept on behalf of the Mutual Fund such books, records and statements expressed in such currencies as may be necessary to give a complete record of all transactions carried out by it on behalf of the Mutual Fund and such other books and records as may be required by the laws and the Trustees and shall permit the Trustees and their employees and auditors to inspect such books, records and statements at all reasonable times and on requests by the Trustee submit true copies thereof. 3.1.14 procure (in so far as it is able) the appointment of nominee/s of the Mutual Fund as Director/s of Companies in which the monies forming part of the Fund are invested. From the above clauses of agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvertisement is an input service. In this regard, we rely the Hon'ble Bombay High Court decision in the case of Coco-Cola India Pvt.Ltd. Vs CCE (supra) on identical issue of advertisement the Hon'ble High Court set aside Tribunal's order and allowed the appeal. The relevant paragraphs of the High Court's order are reproduced as under :- 43. What follows from the above discussion is that the credit is availed on the tax paid on the input service, which is advertisement and not on the contents of the advertisement. Thus it is not necessary that the contents of the advertisement must be that of the final product manufactured by the person advertising, as long as the manufacturer can demonstrate that the advertisement services availed have an effect of or impact on the manufacture of the final product and establish the relationship between the input service and the manufacture of the final product. The manufacturer thereby can avail the credit of the service tax paid by him. Once the cost incurred by the service has to be added to the cost, and is so assessed, it is a recognition by Revenue of the advertisement services having a connection with the manufacture of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax on their output services. This advertisement was issued consequent on withdrawal of service tax exemption on brokerage commission w.e.f. 1.4.2015. Therefore, it is evident that when there was no exemption for service tax, the Board had categorically clarified that assessees have to pay service tax under reverse charge and they are eligible for availing credit. 13. As regards the Revenue's another contention that the document on which credit was availed is not a valid document we find that the issue stands settled by the Hon'ble Madras High Court in the case of CCE Vs M.R.F (supra). The relevant paragraph of the above High Court's order is reproduced as under :- 6. The aforesaid issue involved in these appeals, is no more res integra in view of the decision rendered by the Tribunal in the case of Commissioner of Central Excise, Goa, v. Essel Pro-pack Ltd. reported in 2007 (8) S.T.R. 609 (Tri- Mumbai) wherein it was held as under : ... ... ... 5. I agree with reason adopted by the Commissioner (Appeals). The Revenue in their appeal has nowhere contended as to what the specified document for availing credit during the relevant time. If no document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to avail of such CENVAT Credit, as contended by the learned Counsel appearing for the appellant, cannot be accepted. The Authorities below, as such, have rightly accepted the said Challan as proof of payment of service tax and, as such,. infirmity can be found in the orders passed by the Authorities below. In any even, the appellants are not entitled to rely upon Rule 9 to refuse the credit to the respondents, as Rule 9 is a procedural aspect which cannot deny the claim of the respondents to avail of such CENVAT credit which they are, otherwise, admittedly, entitled to. The substantial question of law is answered accordingly. 8. In view of the law enunciated in the decision cited supra, which we concur with, we hold the first respondent is entitled to avail credit of service tax on the basis of credit of service tax on the basis of TR-6 challan. Accordingly, the question of law raised in these two appeals is answered in favour of the assessee and against the Department. Both these Civil Miscellaneous Appeals stand disposed of. There shall be no orders as to the costs. The ratio of the above High Court's decision is squarely applicable to the present case as Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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