2018 (1) TMI 406 - AT - Central Excise

Appeals on CENVAT credit for sales commission service tax await Gujarat High Court ruling

Gunnebo India P. Ltd, Unimed Technologies Limited, Super Chemicals Industries Versus C.C.E. & S. Tax, Vadodara-I

The Appeals revolved around the eligibility of CENVAT credit on service tax paid on sales commission. The Tribunal deferred its decision pending the ... CENVAT credit - service tax paid on sales commission - Held that: - a Division Bench of this Tribunal in the case of Ashapura Volclay Ltd and others Vs. C.C., Jamnagar [2017 (6) TMI 659 - CESTAT - Ahmedabad] following the principle laid down by the Larger Bench, disposed of the matter, with the liberty to approach the Tribunal after disposal of the cases pending before the higher forum - appeal disposed off. Issues involved: Eligibility of CENVAT credit on service tax paid on sales commission.Analysis:The principal issue in the present Appeals concerns the eligibility of CENVAT credit on service tax paid on sales commission. The Hon'ble Gujarat High Court has previously addressed this issue in cases such as C.C.E. Vs. Cadila Healthcare Ltd. and Astik Dyestuff Pvt. Ltd. Vs. C.C.E. & Cus. In these cases, the High Court held that sales commission paid to agents does not fall under the scope of sales promotion as defined in the 'input service' under the Cenvat Credit Rules, 2004. The High Court emphasized that the judgment of the jurisdictional High Court should prevail over circulars and judgments of other High Courts. Subsequently, an explanation was added to the definition of 'input service' through Notification No.2/2016 CE(NT) dated 03.02.2016, which was interpreted by a Division Bench of the Tribunal in Essar Steel India Ltd. Vs. C.C.E. & S.T., Surat I. The Division Bench found the explanation to be clarificatory and applicable retrospectively, allowing CENVAT credit on service tax paid on sales commission even before 03.02.2016. However, the Revenue challenged this decision before the High Court of Gujarat, and the matter is pending. In light of the pending appeal and the binding nature of the High Court's judgment, the Tribunal decided to wait for the High Court's verdict before making a decision. This approach aligns with the principle laid down in the case of Ashapura Volclay Ltd and others Vs. C.C., Jamnagar, where the Tribunal disposed of the matter with the liberty to approach the Tribunal after the higher forum's decision. Therefore, the present appeals were also disposed of with the liberty for both parties to return to the Tribunal after the High Court's verdict, with no recovery or refund processed in the meantime.