Commissioner Central GST And Central Excise Vadodara - I vs. M/S Ami Lifesciences PVT. LTD.

Held

The High Court disapproved of the manner in which the CESTAT disposed of the appeals. The Court held that the CESTAT ought to have decided the appeals on merits, given the binding decisions of the High Court in Cadila Healthcare Ltd. and Astik Dyestuff Pvt. Ltd. However, if the CESTAT believed that the subsequent notification No.2/2016-CE(NT) and its retrospective application, pending before the High Court in the Essar Steel India Ltd. case, made it inappropriate to decide on merits, then the CESTAT should 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. Therefore, the impugned order of the CESTAT was quashed and set aside. The appeals were restored to the file of the CESTAT and directed to be kept pending until the decision of the High Court in the Essar Steel India Ltd. case (Tax Appeal No.444 of 2016) to avoid multiplicity of proceedings. The Revenue was permitted to file an application for early hearing of the Essar Steel case.

Facts

The Revenue (Commissioner of Central GST) filed multiple tax appeals against orders passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). The CESTAT had disposed of appeals filed by Jay Chemical Industries Ltd. (the assessee) without deciding them on merits. Instead, the CESTAT granted liberty to approach the Tribunal again after the decision of the Gujarat High Court in a pending appeal concerning 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 that the merits were against them based on these precedents but argued that a subsequent notification (No.2/2016-CE(NT)) regarding the definition of 'input service' was at large before the High Court in the Essar Steel case, and its retrospective application could alter the outcome.

Key Issues

1. Whether the CESTAT was legally justified in not deciding the appeals on merits, despite existing jurisdictional High Court decisions in favor of the Revenue (Cadila Healthcare Ltd. and Astik Dyestuff Pvt. Ltd.)? 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? Contentions of the Revenue: The Revenue argued that the CESTAT should have decided the appeals on merits because the issue was concluded in its favor by the High Court's decisions in Commissioner of C.Ex., Ahmedabad-II Vs. Cadila Healthcare Ltd. and Astik Dyestuff Pvt. Ltd. Vs. Commissioner of C.Ex. & Customs. Contentions of the Assessee: The assessee conceded that the merits were against them based on the Cadila Healthcare and Astik Dyestuff judgments. However, they argued that 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. If the notification was held retrospective, the earlier judgments would not apply, and the assessee would be entitled to Cenvat credit. Therefore, the assessee supported the CESTAT's decision not to decide on merits pending the High Court's ruling, but agreed that the appeals should have been kept pending rather than disposed of.