2018 (8) TMI 1451 - HC - Central Excise

CENVAT credit - service tax paid on sales commission - input service or not - The Tribunal disposed of all appeals with liberty to both sides to approach the Tribunal soon after the verdict of the Hon ble High Court in the pending appeal against the Division Bench judgement of this Tribunal in case of Essar Steel India Limited 2016 (4) TMI 232 - CESTAT AHMEDABAD filed by the Revenue. Held that - The Tribunal is a creation of statute. Section 35C(1) of the the Central Excise Act, mandates the Tribunal to dispose of the appeals on merits. It was simply not open for the Tribunal to jettison the litigation in this manner - It will be open for the Revenue /Department to file note/ application for fixing early date of hearing of Tax Appeal No.444 of 2016, as the decision on the said appeal would have direct bearing in pending appeals before the learned Tribunal, which are reported to be more than 100. Proceedings are remanded to the Tribunal for further consideration and disposal in accordance with law - appeal allowed.

Issues:
1. Challenge to the order of Customs, Excise and Service Tax Appellate Tribunal regarding Cenvat credit of service tax paid on sales commission.
2. Interpretation of the amendment to the definition of "input service" under the Cenvat Rules.
3. Tribunal's approach in disposing of appeals pending the outcome of a related High Court appeal.
4. Legality of the Tribunal's decision to defer appeals pending the High Court verdict.
5. Compliance with statutory mandate by the Tribunal in disposing of appeals on merits.

Analysis:
1. The High Court addressed the challenge to the Tribunal's order concerning the Cenvat credit of service tax paid on sales commission. The issue stemmed from conflicting interpretations between the department and the respondent-manufacturer, with reference to relevant case law. The Tribunal's decision was influenced by a pending appeal before the High Court, leading to a peculiar background for the current dispute.

2. The crux of the matter revolved around the interpretation of the amendment to the definition of "input service" under the Cenvat Rules. The Tribunal faced a dilemma in reconciling the department's reliance on previous High Court judgments with the assessees' argument that the amendment should apply retrospectively to all pending cases, irrespective of the date of the amendment.

3. The Tribunal's approach in handling appeals pending the outcome of a related High Court appeal was scrutinized by the High Court. The Tribunal's decision to dispose of appeals with liberty for parties to approach after the High Court verdict was deemed unsatisfactory. The High Court criticized the Tribunal for merely showing disposal of cases without resolving the underlying disputes, potentially leading to a multiplicity of proceedings.

4. The legality of the Tribunal's decision to defer appeals pending the High Court verdict was questioned, emphasizing that dispensation of justice should not be reduced to mere statistics. The lack of clarity in the Tribunal's order regarding timelines for filing fresh proceedings and the finality of decisions in the absence of appeals raised significant concerns about the efficacy of the Tribunal's approach.

5. Lastly, the High Court underscored the statutory mandate for the Tribunal to dispose of appeals on merits, highlighting that the Tribunal's deviation from this obligation was impermissible. Citing a precedent, the High Court directed a similar course of action for the pending appeals, emphasizing the need to avoid further multiplicity of proceedings and ensuring compliance with legal requirements.

In conclusion, the High Court's detailed analysis of the issues surrounding the Tribunal's handling of appeals underscored the importance of upholding statutory mandates, ensuring clarity in judicial decisions, and avoiding unnecessary delays or complications in the resolution of legal disputes.

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