Input or Output Service

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CA PRAMOD SARAOGI

Chartered Accountant

961 Points Posted on 12 September 2009

A client of mine is a commission agent of a Yarn manufacturing company. He sells yarn on behalf of the manufacurer and thereby earns commission from the manufacturer. Invoices are raised by the manufacturer directly in the name of he customers . Commission Agent charges service tax in the Commsion billls.The manufacturerer's delivery term is his ex-godown. Commisionagent is libale to deliver the Goods from the manufaturers godown to his customers place for which he pays the frieght. and the GTA charges service tax from him.

Can he claim Cenvat credit ? The amount of service tax paid to GTA be set off with that of the service tax payable in respect of Commision received.

Replies (3)

EKALABYA TALUKDAR

SERVICE TAX CONSULTANT

609 Points Posted on 12 September 2009

Originally posted by :CA PRAMOD SARAOGI
"	A client of mine is a commission agent of a Yarn manufacturing company. He sells yarn on behalf of the manufacurer and thereby earns commission from the manufacturer. Invoices are raised by the manufacturer directly in the name of he customers . Commission Agent charges service tax in the Commsion billls.The manufacturerer's delivery term is his ex-godown. Commisionagent is libale to deliver the Goods from the manufaturers godown to his customers place for which he pays the frieght. and the GTA charges service tax from him. Can he claim Cenvat credit ? The amount of service tax paid to GTA be set off with that of the service tax payable in respect of Commision received.	"

First thing Who is Selling the product. Who is Commission Agent and Who is End user. If Seller is selling the product to End user and pays Commission to Commission Agent – Here commission agent has no opportunity to make the Bill to End user. Commission Agent can only make a bill to Seller and charge his Commission with SERVICE TAX. How the Transport obligation will be solved is Sellers head ache

CA PRAMOD SARAOGI

Chartered Accountant

961 Points Posted on 12 September 2009

My query is very simple - The Commission agent is earning commission from Sale of yarn (ex-godown of principle) on behalf of his principle and paying for the Cartage/Transportation from his principal's godown to his customers godown. can he take credit of service tax paid to transport from the service tax collected from his principle on account of commision charged. The commission agent has to pay for GTA as the pribciple or his customer would not be bear the transport charges and it is in his business interest to bear the burden of transportation

SAMEER

CHARTERED ACCOUNTANT

171 Points Posted on 12 September 2009

Dear Pramod

Since the liability of transportation is taken over by the Comm agent- compensation he is recieving as commission also includes payment of frieght hence freight is the input service of commission service and hence CENVAT SHOULD HAVE BEEN ALLOWED however please check that