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Utilization of credit of s.tax paid on sales commission.

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MILAN DAS

ICWAI FINAL

21 Points Posted on 30 July 2014

Dear friend,

My company is manufacturing greases and to sale the grease we pay sales commission and service tax thereon. We availed & utilised the service tax as input service under rule 2(l) of CENVAT Credit Rules 2004. But the dept give me a show cause notice for wrong utilisation of credit. The state that as it is not qualified as input service as this is not relating to manufacture of final products and that can't be a sales promotion exp.

They demand the duty with penalty.

So my friends please suggest me what should I do.

Regards,

Milan Das.

Replies (1)

Saurabh Maheshwari

B.com ACA

4340 Points Posted on 30 July 2014

Yes , the contention of Deptt is right because the commission paid has no nexsus with the manufacture or clearance of final products.....further the same is not covered by specified input service "Sales promotion"(as payment of commission to agent doesnot amount to sales prmotion because s.promotion usually include an element of passing of benefit to customers and not to intermediaries)