Tribunal rules on CENVAT credit for sales commission, parties can seek High Court review

The Tribunal disposed of the Appeals concerning the eligibility of CENVAT credit on service tax paid on sales commission. The Tribunal granted both parties the liberty to approach after the High Court's verdict on the pending appeal challenging the interpretation of a notification issued in 2016 clarifying the definition of 'input service.' No recovery or refund will be processed during this period.

---

---

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

Analysis:
The principal issue in the present Appeals pertains to the eligibility of CENVAT credit on service tax paid on sales commission. The Hon'ble Gujarat High Court previously ruled in the case of C.C.E. Vs. Cadila Healthcare Ltd. that sales commission paid to agents does not fall under the scope of sales promotion as an 'input service' under Rule 2(l) of Cenvat Credit Rules, 2004. This issue was revisited in the case of Astik Dyestuff Pvt. Ltd. Vs. C.C.E. & Cus., where the High Court reiterated its earlier stance, emphasizing that the judgment of the jurisdictional High Court supersedes circulars and judgments of other High Courts. Subsequently, a notification was issued in 2016, clarifying the definition of 'input service,' which was interpreted by a Division Bench of the Tribunal as being retrospective in application, allowing CENVAT credit on service tax paid on sales commission even before 2016. The Revenue challenged this interpretation before the High Court, which is pending. In light of the pending appeal and the binding nature of the High Court's judgment, the Tribunal decided to dispose of the present Appeals, granting both parties the liberty to approach the Tribunal after the High Court's verdict on the pending appeal. No recovery or refund will be processed during this period. The Appeals were thus disposed of accordingly.

---