2017 (12) TMI 494 - AT - Central Excise

CENVAT credit on the service tax paid on sales commission - N/N. 2/2016 CE(NT) dated 03.02.2016 - Held that - Tribunal in Essar Steel India Ltd. Vs. C.C.E. & S.T., Surat I 2016 (4) TMI 232 - CESTAT AHMEDABAD holding that the same is clarificatory in nature and hence, retrospective in application. In other words, even for the period prior to 03.02.2016, the service tax paid on sales commission has been held to be admissible to CENVAT credit. In similar circumstances, 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 disposed of the matters, with the liberty to approach the Tribunal after disposal of the cases pending before the higher forum - Appeal disposed of.

Summary

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

Analysis:
The judgment by the Appellate Tribunal CESTAT Ahmedabad revolves around the eligibility of CENVAT credit on service tax paid on sales commission. The Tribunal notes that the issue has been previously addressed by the Hon'ble Gujarat High Court 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 does not fall under the scope of sales promotion as per the definition of "input service" under the Cenvat Credit Rules, 2004. Despite a circular and contrary opinion from other High Courts, the Gujarat High Court's judgment was deemed to prevail. Subsequently, an explanation was added to the definition of 'input service' through a notification, clarifying that service tax paid on sales commission is admissible to CENVAT credit even for periods before the notification. The Revenue challenged this decision, leading to an appeal before the Gujarat High Court, which is pending. In light of the number of appeals on the same issue and the binding nature of the High Court's judgment, the Tribunal decided to wait for the High Court's verdict before making a final decision. The Tribunal followed a similar approach taken in a previous case, granting both parties the liberty to approach the Tribunal after the High Court's decision. The appeals were disposed of with this condition, ensuring no recovery or refund would be processed until then.

This detailed analysis of the judgment showcases the legal intricacies involved in determining the eligibility of CENVAT credit on service tax paid on sales commission, highlighting the significance of judicial precedents, circulars, and notifications in shaping the outcome of the case.