2017 (10) TMI 273 - 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.

Analysis:
The judgment by Appellate Tribunal CESTAT Ahmedabad addressed the eligibility of CENVAT credit on service tax paid on sales commission, a common issue in two appeals. The Hon'ble Gujarat High Court's decisions in previous cases were cited, including 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 does not fall under the scope of sales promotion as an 'input service' under Rule 2(l) of Cenvat Credit Rules, 2004. The judgment emphasized that the jurisdictional High Court's decision prevails over Circulars and judgments of other High Courts. Despite a subsequent notification in 2016 clarifying the definition of 'input service,' the Division Bench of the Tribunal in Essar Steel India Ltd. Vs. C.C.E. & S.T. ruled that the clarification was retrospective, allowing CENVAT credit on service tax paid on sales commission even before 2016. However, the Revenue challenged this decision in the High Court of Gujarat, which is pending. In light of the pending appeal and the principle laid down in previous cases, the Tribunal decided to dispose of the present appeals with the liberty for both parties to approach the Tribunal after the High Court's verdict. No recovery or refund would be processed during this period, and the appeals were concluded accordingly.