Tribunal defers decision on CENVAT credit eligibility pending High Court ruling

The Tribunal deferred the decision on the eligibility of CENVAT credit on service tax paid on sales commission pending a High Court verdict. Emphasizing the precedence of the jurisdictional High Court's judgment, the Tribunal refrained from making a determination while the matter was sub judice. Both parties were granted the liberty to revisit the Tribunal post the High Court's decision, with no recovery or refund actions to be taken in the interim. The appeals and cross-objections were resolved in accordance with this approach.

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Issues:
Eligibility of CENVAT credit on service tax paid on sales commission.

Analysis:
The judgment dealt with the eligibility of CENVAT credit on service tax paid on sales commission, a common issue in two appeals. The issue was previously decided by the Hon'ble Gujarat High Court in the case of C.C.E. vs. Cadila Healthcare Ltd. The subsequent case of Astik Dyestuff Pvt. Ltd. vs. C.C.E. & Cus. reaffirmed the earlier judgment, emphasizing that the judgment of the jurisdictional High Court should prevail over circulars and judgments of other High Courts. An explanation was inserted into the definition of input service by Notification No.2/2016 CE(NT) dated 03.02.2016, interpreted as clarificatory and retrospective in application by a Division Bench of the Tribunal. This interpretation allowed service tax paid on sales commission to be eligible for CENVAT credit even for the period before 03.02.2016. The Revenue, aggrieved by this judgment, filed a Civil Appeal before the High Court of Gujarat, which is pending. Considering the number of appeals on the same issue and the binding nature of the High Court's judgment, the Tribunal deemed it inappropriate to decide the issue while the matter was pending before the High Court. Following a similar precedent, the present appeals were disposed of with the liberty for both sides to approach the Tribunal after the High Court's verdict on the pending appeal against the Division Bench judgment.

In conclusion, the Tribunal's decision was based on the principle that the judgment of the jurisdictional High Court should prevail, especially when the matter is pending before a higher forum. The Tribunal exercised caution in deciding the issue and provided both parties with the opportunity to approach the Tribunal after the High Court's decision. No recovery or refund would be processed during this period. The appeals and cross-objections were disposed of accordingly.

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