Customs, Excise and Services Tax Appellate Tribunal (CESTAT): Ramesh Nair (Judicial Member) allowed an appeal which was filed against the order of the adjudicating authority wherein they had rejected the refund claim on the ground that sales commission is not input service and also on the ground that the appellant have admittedly reversed the amount without under protest hence, the appellant had agreed to the audit, on the basis of which the audit para was closed and the queries were settled.

The appellant had availed the Cenvat Credit in respect of service tax paid on sales commission. The audit officers had raised an objection that the sales commission was not an admissible input service after which appellant had reversed the Cenvat credit. Thereafter, they had filed refund claim within one year from the date of reversal on the ground that as per subsequent development of law in case of Essar Steel India Ltd. v. CCE, 2016-TIOL-520-CESTAT-AHM the Cenvat credit was admissible on sales commission.

Counsel appearing on behalf of the appellant submitted that as regards the objection of non admissibility of the Cenvat credit on sales commission the department had not issued the show cause notice. Therefore, the refund cannot be rejected. He further submitted that even though the protest was not lodged while reversing the credit the appellant had within right to file a refund claim within a stipulated period of one year as provided under section 11B of Central Excise Act, 1944.

The Tribunal found that the reversal was made on the objection of the audit party. Though the reversal was not made under protest but the appellant has right to claim refund within one year as mandated under section 11B of Central Excise Act,1944., therefore only on the ground that the appellant has not filed under protest letter while reversing the credit refund cannot be rejected on this ground.

Further the Tribunal clarified that the merit that whether the sales commission was admissible input service or otherwise the issue was subjudice before the Hon’ble High Court of Gujarat in the case of Essar Steel India Ltd. and also before the Hon’ble Supreme Court in the case of the Cadila Health Care Ltd. Therefore, at this stage the merit could not be decided.

The Tribunal allowed the appeal by way of remand to the Adjudicating Authority for passing a fresh order after the legal issue is settled on the admissibility of the Cenvat Credit on sales commission.[Prayosha Healthcare (P) Ltd. v. C.C.E. & ST, 2021 SCC OnLine CESTAT 2555, decided on 21-09-2021]

Suchita Shukla, Editorial Assistant has reported this brief.

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