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

The Appeals revolved around the eligibility of CENVAT credit on service tax paid on sales commission. The Tribunal deferred its decision pending the outcome of a pending challenge by Revenue before the Gujarat High Court. The Tribunal cited the principle of awaiting higher forum decisions, as seen in previous cases. Both parties were granted liberty to return to the Tribunal after the High Court's verdict, with no recovery or refund actions taken in the interim.

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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.

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