2017 (10) TMI 272 - AT - Central Excise

CENVAT credit - service tax paid on sales commission - input services - whether sales commission paid to agents fall under the scope of sales promotion? - 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 matters, with the liberty to approach the Tribunal after disposal of the case pending before the higher forum - Following the said judgment, the present appeal is also 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 - appeal disposed off.

Summary

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

The judgment by the Appellate Tribunal CESTAT Ahmedabad involved multiple appeals concerning the eligibility of CENVAT credit on service tax paid on sales commission. The principal issue revolved around whether sales commission could be considered an input service for the purpose of claiming CENVAT credit. The Tribunal noted that the Hon'ble Gujarat High Court had previously ruled on this matter in cases such as C.C.E. Vs. Cadila Healthcare Ltd. and Astik Dyestuff Pvt. Ltd. Vs. C.C.E. & Cus. The High Court held that sales commission paid to agents did not qualify as sales promotion under the definition of 'input service' in the Cenvat Credit Rules, 2004. Despite a subsequent notification amending the definition of 'input service,' the Tribunal referred to a Division Bench judgment in Essar Steel India Ltd. Vs. C.C.E. & S.T., Surat I, which interpreted the amendment as clarificatory and applicable retrospectively. The Revenue, however, challenged this interpretation by filing a Civil Appeal before the High Court of Gujarat.

In light of the conflicting views and the pending appeal before the High Court, the Tribunal decided to follow the principle laid down in a previous case involving Ashapura Volclay Ltd and others Vs. C.C., Jamnagar. Accordingly, the Tribunal disposed of the present appeals with the liberty for both parties to approach the Tribunal again after the High Court's verdict on the pending appeal against the Division Bench judgment in Essar Steel India Ltd.'s case. It was clarified that no recovery or refund would be processed during this period. The Tribunal emphasized that the judgment of the High Court in Astik Dyestuff Pvt. Ltd.'s case was binding within its territorial jurisdiction, and hence, it would be inappropriate to make a decision conflicting with the pending appeal. Therefore, the appeals and cross-objections were disposed of accordingly.