2017 (10) TMI 268 - 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 involved:
Eligibility of CENVAT credit on service tax paid on sales commission.

Analysis:
The principal issue in the present Appeal concerns the eligibility of CENVAT credit on the service tax paid on sales commission. The matter has been previously addressed by the Hon'ble Gujarat High Court in the case of C.C.E. Vs. Cadila Healthcare Ltd., where it was held that sales commission paid to agents does not qualify as sales promotion under the definition of 'input service' in Rule 2(l) of the Cenvat Credit Rules, 2004. Subsequently, in the case of Astik Dyestuff Pvt. Ltd. Vs. C.C.E. & Cus., the High Court reaffirmed this position and emphasized that the judgment of the jurisdictional High Court prevails over circulars and judgments from other High Courts. Despite a notification in 2016 amending the definition of 'input service,' the Tribunal in Essar Steel India Ltd. Vs. C.C.E. & S.T. interpreted it as clarificatory and retrospective, allowing CENVAT credit on service tax paid on sales commission even before 2016. However, due to a pending Civil Appeal by the Revenue before the High Court challenging this interpretation, the Tribunal decided to wait for the High Court's verdict before making a final determination.

In light of the numerous appeals on the same issue and the binding nature of the High Court's judgment in Astik Dyestuff Pvt. Ltd.'s case, the Tribunal deemed it inappropriate to decide the matter while the issue was sub judice before the High Court. Following a similar precedent set in Ashapura Volclay Ltd and others Vs. C.C., Jamnagar, the Tribunal disposed of the present appeal with the liberty for both parties to approach the Tribunal again after the High Court's decision on the pending Appeal against the Tribunal's judgment in Essar Steel India Ltd.'s case. It was clarified that no recovery or refund would be processed during this period, and the appeal was thus concluded accordingly.