2018 (2) TMI 571 - AT - Service Tax

Tribunal defers decision on CENVAT credit eligibility pending High Court clarification

The Tribunal deferred its decision on the eligibility of CENVAT credit on service tax paid on sales commission pending the High Court of Gujarat's ... CENVAT credit - sales commission - Held that: - In similar circumstances, 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. The present appeals are also disposed of with the liberty to both sides to approach the Tribunal - appeal disposed off. Issues:Eligibility of CENVAT credit on service tax paid on sales commission.Analysis:The appeal was filed against the Order-in-Appeal dated 11.8.2015 passed by the Commissioner(Appeals I), Central Excise, Customs & Service Tax, Vadodara. The principal issue in this case was the eligibility of CENVAT credit on the service tax paid on sales commission. Both parties referred to the judgment of the Hon’ble Gujarat High Court in the case of C.C.E. Vs. Cadila Healthcare Ltd., where it was observed that sales commission paid to agents did not fall under the scope of sales promotion mentioned in the definition of ‘input service’ under the Cenvat Credit Rules, 2004. This issue was revisited by the Hon’ble Gujarat High Court in Astik Dyestuff Pvt. Ltd. Vs. C.C.E. & Cus., where it was held that the judgment of the jurisdictional High Court should prevail over circulars and judgments of other High Courts.The definition of ‘input service’ was later amended by 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, clarifying that the amendment was retrospective in nature. However, the Revenue challenged this interpretation by filing a Civil Appeal before the Hon’ble High Court of Gujarat. In light of the pending appeals and the binding nature of the High Court’s judgment in Astik Dyestuff Pvt. Ltd.’s case, the Tribunal decided to wait for the High Court’s verdict before making a decision. This approach was consistent with the Tribunal’s decision in Ashapura Volclay Ltd and others Vs. C.C., Jamnagar, where matters were disposed of with the liberty to approach the Tribunal after the higher forum’s decision. The present appeals were also disposed of with the same liberty, emphasizing that no recovery or refund would be processed during this period.In conclusion, the Tribunal deferred its decision on the eligibility of CENVAT credit on service tax paid on sales commission until the Hon’ble High Court of Gujarat provided clarity on the matter, following the principle that the High Court’s judgment prevails over other interpretations. The appeals were disposed of with the liberty for both parties to approach the Tribunal after the High Court’s verdict, ensuring no recovery or refund actions during this period.