Service Tax Credit

Dear Sir

We are a Pvt Ltd Co. having factory, head office and sales depos -

1) we are paying commission to some parties for procuring sales order for us.

2) We are paying rent for premises used by sales depos.

we have taken service tax credit on both in our factory. Excise Audit Team says these are not input service hence we are not entitled for credit.

kindly advise with notification/circuler No./ service tax credit rules.

regards

Dharmendra Agarwal

Replies (2)

Input Service is defined used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal and inter alia includes services used in relation to sales promotion, advertising, storage upto the place of removal........  By looking into the above definition, the answer to first question is "yes" because the sales commission paid is to promote sales and the answer to second question is "no" because the rent paid for godowns/depots is not covered upto the place of removal which is after the factory gate being the first place of removal.

The definition of Place of removal, interalia, includes depots, premises of c'ment agent from where the goods are removed after clearance from the factory. So, if the goods are sold from depots after clearance, the rent paid comes within the purview of Input service.

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