2017 (12) TMI 435 - AT - Central Excise

Tribunal defers action pending High Court decision, stresses respect for precedent

The Tribunal disposed of the appeal, allowing parties to approach it after the High Court's decision on a pending appeal challenging a Division Bench ... CENVAT credit - input services - sales commission - whether the sales commission paid to agents would fall under the scope of sales promotion mentioned under the inclusive part of the definition of ‘input service’ prescribed under Rule 2(l) of CCR, 2004? - Held that: - the present appeal is disposed of with the liberty to both sides to approach the Tribunal soon after the verdict of the Hon’ble High Court in the pending Appeal against the Division Bench judgment of this Tribunal in Essar Steel India Ltd.’s case [2016 (4) TMI 232 - CESTAT AHMEDABAD] filed by the Revenue, where it was held that even for the period prior to 03.02.2016, the service tax paid on sales commission has been held to be admissible to CENVAT credit - appeal disposed off. Issues involved: Eligibility of CENVAT credit on service tax paid on sales commission.Analysis:The principal issue in this appeal is the eligibility of CENVAT credit on the service tax paid on sales commission. The Ld. AR for the Revenue argued that the Hon'ble Gujarat High Court had previously ruled in cases such as C.C.E. Vs. Cadila Healthcare Ltd. and Astik Dyestuff Pvt. Ltd. Vs. C.C.E. & Cus. that sales commission does not fall under the scope of sales promotion as an input service under the Cenvat Credit Rules, 2004. The High Court held that the judgment of the jurisdictional High Court should prevail over Circulars and judgments of other High Courts. Additionally, a Division Bench of the Tribunal in Essar Steel India Ltd. Vs. C.C.E. & S.T. clarified that the amendment to the definition of input service through Notification No.2/2016 CE(NT) dated 03.02.2016 was retrospective, allowing CENVAT credit on service tax paid on sales commission even before the amendment date. However, the Revenue challenged this decision before the High Court of Gujarat, which is still pending. In light of the pending appeal and the principle laid down by a Larger Bench, the Tribunal decided to dispose of the present appeals with the liberty for both parties to approach the Tribunal after the High Court's verdict on the pending appeal against the Division Bench judgment. No recovery or refund will be processed during this period, and the appeal was disposed of accordingly.This judgment highlights the importance of judicial precedence and the binding nature of High Court decisions within their territorial jurisdiction. It also demonstrates the significance of clarificatory amendments and the retrospective application of such amendments in tax matters. The Tribunal's decision to await the High Court's verdict before making a final determination showcases a prudent approach to ensure consistency and adherence to higher judicial authority.