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In Prayosha Healthcare Pvt Ltd v. C.C.E. & S.T.-Vadodara-ii [Excise Appeal No.11102 of 2018 dated September 21, 2021], the current appeal has been filed against Order-in-Appeal OIA-VAD-EXCUS-002-APP-613-2017-18 dated November 21, 2017 (“OIA”) passed by Commissioner (Appeals) of Central Excise, Customs and Service Tax- VADODARA-I (“Respondent”) for rejecting the appeal against Order-in-Original (“OIO”) which rejected the refund claim against reversal of Central Value Added Tax Credit (“CENVAT”) of Prayosha Healthcare Pvt Ltd (“the Appellant”).
The Appellant availed CENVAT Credit of Service Tax paid on sales commission to which the audit officers raised objections holding the same to not be admissible since sales commission is not an input service and the credit availed should be reversed. On the objection, the Appellant reversed the CENVAT Credit however filed a refund claim within a year from date of reversal on the ground that CENVAT credit is admissible on sales commission as per the ruling provided in the judgment M/s. Essar Steel India Ltd. v. C.C.E [2016-TIOL-520-CESTAT-AHM].
OIO- The OIO rejected the refund claim on the ground that sales commission is not input service and also on the ground that the Appellant had reversed the amount without under protest thereby, the Appellant agreed to the audit.
OIA- After filing of the appeal against OIO, the OIA also rejected the claim of the Appellant on the ground of non admissibility of sales commission as input services by referring to the definition of input service.
The Hon’ble CESTAT Ahmedabad on the current issue observed that even though the reversal was not made under protest, the Appellant has the right to claim refund within one year as per Section 11B of Central Excise Act,1944 (“the CE Act”). Noted, that the Appellant not filing the application under protest letter while reversing the credit refund cannot be rejected on this ground.
Further, noted that the matter as to whether sales commission is admissible as input service is subjudice before the Hon’ble Gujarat High Court in the case of M/s Essar Steel India Limited (supra), and Hon’ble Supreme Court in Cadila Healthcare Limited v. Commissioner of Central Excise, Surat-II [Appeal No: E/957/2012-DB], therefore the same cannot be decided on merits yet.
Held, the OIA is set aside and the appeal is allowed by way of remand to the Adjudicating Authority to pass a fresh order once the legal issue on admissibility of CENVAT Credit on sales commission is settled before the Hon’ble Supreme Court and Hon’ble Gujarat High Court.
(Author can be reached at info@a2ztaxcorp.com)
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