2018 (7) TMI 1065 - HC - Service Tax

CENVAT Credit - service tax paid on sales commission - amendments in relevant statutory provisions - Held that - A co-ordinate bench of the Tribunal in case of M/s. Essar Steel India Ltd. vs. C.C.E. & S.T., Surat-I, 2016 (4) TMI 232 - CESTAT AHMEDABAD had held that such amendments were clarificatory in nature and therefore even with respect to cases arising prior to the amendment service tax paid on sales commission would be eligible for cenvat credit. It was noticed that such judgement of the Tribunal has been carried in appeal by the department before the High Court - such appeal is admitted and is pending 2016 (6) TMI 1305 - GUJARAT HIGH COURT . The Tribunal ought not to have disposed of the appeals in the above manner. The appeals presently stands disposed of without finality. Even after the High Court decides the issue, it is not clear how the outcome would apply to the appeals which are disposed of by the Tribunal by the present judgement. Notice for final disposal returnable on 05.07.2018.

Summary

Issues:
- Challenge to common judgment of CESTAT by the department
- Interpretation of statutory provisions and amendments
- Binding effect of High Court judgment on Tribunal
- Proper disposal of appeals pending High Court decision

Analysis:
The High Court judgment involved Tax Appeals filed by the department challenging a common judgment of CESTAT. The department contended that the issue had already been decided in their favor in previous cases. However, it was noted that there were subsequent amendments in the relevant statutory provision. A co-ordinate bench of the Tribunal had held that these amendments were clarificatory, allowing service tax paid on sales commission to be eligible for cenvat credit even in cases arising prior to the amendment. The Tribunal had disposed of appeals based on the observation that the matter was pending before the High Court, following the principle that the judgment of the High Court is binding on all within its jurisdiction.

The High Court expressed the opinion that the Tribunal should not have disposed of the appeals in the manner it did, as the appeals were left without finality. It was unclear how the outcome of the High Court decision would apply to the appeals already disposed of by the Tribunal. Therefore, the High Court directed a notice for final disposal returnable on a specific date, allowing direct service.

In conclusion, the judgment highlighted the importance of proper disposal of appeals pending a High Court decision, ensuring that the outcome of the higher forum's verdict is appropriately applied to the disposed appeals. The binding effect of High Court judgments on Tribunals within its jurisdiction was emphasized, indicating the need for consistency and adherence to legal principles in such matters.