The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad bench has held that a mere act of failure to file under protest letter while reversing the credit refund cannot be a reason to reject refund claim of the taxpayer.
Judicial Member Ramesh Nair was considering an appeal filed by M/s Prayosha Healthcare Pvt Ltd, who availed the Cenvat Credit in respect of service tax paid on sales commission. The audit officers have raised objection that the sales commission is not an admissible input service. On the objection of the audit party, the appellant have reversed the Cenvat credit. Thereafter, they have filed refund claim within one year from the date of reversal on the ground that as per subsequent development of law in case of M/s. Essar Steel India Ltd. V/s. CCE, the Cenvat credit is admissible on sales commission.
However, the department rejected the refund claim by holding that the 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.
While concluding the matter in favour of the assessee, the Tribunal held 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. As regard the merit that whether the sales commission is admissible input service or otherwise the issue is 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 cannot be decided,” the Tribunal said.
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