Assistant Commissioner Of Central Tax Div-Iii vs. M/S Windsor Machines LTD.

Held

The High Court disapproved of the manner in which the CESTAT disposed of the appeals. The Court held that the CESTAT should have decided the appeals on merits, considering the binding decisions of the High Court in Cadila Healthcare Ltd. and Astik Dyestuff Pvt. Ltd. Alternatively, if the CESTAT believed it was inappropriate to decide on merits due to the pending issue of retrospective applicability of Notification No.2/2016-CE(NT) in the Essar Steel India Ltd. case, it ought to have kept the appeals pending. The Court found the CESTAT's procedure of disposing of appeals without deciding them on merits, with liberty to approach again, to be incorrect, improper, and likely to cause harassment and inconvenience. Consequently, the impugned common order of the CESTAT was quashed and set aside. The appeals were restored to the file of the CESTAT and remanded with a direction to keep them pending until the decision of the High Court in the Essar Steel India Ltd. case. The appeals were partly allowed to this extent.

Facts

A group of six Tax Appeals were filed by the Commissioner of Central GST against M/s. Jay Chemical Industries Ltd. The appeals challenged common judgments and orders passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). The CESTAT had disposed of the appeals without deciding them on merits, granting liberty to the parties to approach the Tribunal after the disposal of a pending appeal before the High Court in the case of Commissioner of Central Excise & Customs, Surat-II Vs. Essar Steel India Ltd. The Revenue contended that the CESTAT should have decided the appeals on merits, citing High Court decisions in Commissioner of C.Ex., Ahmedabad-II Vs. Cadila Healthcare Ltd. and Astik Dyestuff Pvt. Ltd. Vs. Commissioner of C.Ex. & Customs. The assessee acknowledged the merits but argued that a subsequent notification (No.2/2016-CE(NT)) regarding input service definition was at large before the High Court in the Essar Steel India Ltd. case, making it inappropriate to decide on merits.

Key Issues

1. Whether the CESTAT was legally justified in not deciding the appeals on merits, despite existing jurisdictional High Court decisions in favour of the Revenue in the cases of Commissioner of C.Ex., Ahmedabad-II Vs. Cadila Healthcare Ltd. and Astik Dyestuff Pvt. Ltd. Vs. Commissioner of C.Ex. & Customs? 2. Whether the CESTAT was legally justified in passing an order for no recovery or any refund of Cenvat Credit of Service Tax paid on Sales Commission during the period? Petitioner's (Revenue) contention: The CESTAT ought to have decided the appeals on merits as the issue was concluded in favour of the Revenue by the High Court's decisions in Cadila Healthcare Ltd. and Astik Dyestuff Pvt. Ltd. Respondent's (Assessee) contention: While the merits were against the assessee based on prior rulings, the applicability of a subsequent notification (No.2/2016-CE(NT)) retrospectively was pending before the High Court in the Essar Steel India Ltd. case. Therefore, the CESTAT was correct in not deciding on merits, but should have kept the appeals pending rather than disposing of them.