Case Details: L and T Construction Equipment Ltd. Versus Commissioner of Central Tax, Bangalore North (2025) 30 Centax 109 (Kar.)
Judiciary and Counsel Details
- Krishna S. Dixit & Ramachandra D. Huddar, JJ.
- S/Shri Udaya Holla, Senior Counsel a/w. Mohan Maiya G.L. & Prithwiraj Chouduri, Advs., for the Appellant.
- Shri Aravind V. Chavan, Adv., for the Respondent.
Facts of the Case
The petitioner, engaged in manufacturing activities, availed CENVAT credit on service tax paid to Larsen & Toubro Ltd. for services rendered as a commission agent. The Department objected to the credit, contending that such services did not qualify as ‘input service’ under Rule 2(l) of the Cenvat Credit Rules, 2004. The petitioner’s claim was rejected by the lower authority, and the matter was carried before the Tribunal. The Tribunal dismissed the petitioner’s claim, primarily relying on the judgment of the Gujarat High Court in Commissioner v. Cadila Healthcare Ltd. [2013 (30) S.T.R. 3 (Guj.) which held that commission agent services could not be treated as input services. Aggrieved, the petitioner challenged the Tribunal’s order before the Gujarat High Court. It was submitted that the Tribunal had failed to consider binding coordinate bench decisions, including one from its own bench, which had recognized the eligibility of commission services as input services.
The petitioner’s central argument, however, focused on the fact that the Commissioner v. Cadila Healthcare Ltd. [2013 (30) S.T.R. 3 (Guj.) decision, on which the Tribunal had entirely relied, stood overturned by the Supreme Court in Zydus Lifesciences Ltd. v. Commissioner of Central Excise, Ahmedabad-II (2023) 13 Centax 93 (S.C.), wherein commission agent services were recognized as input services.
High Court Held
The Hon’ble High Court held that the Tribunal’s order was unsustainable as it was predominantly based on a precedent (Commissioner v. Cadila Healthcare Ltd. [2013 (30) S.T.R. 3 (Guj.)) that stood reversed by the Supreme Court in Zydus Lifesciences Ltd. v. Commissioner of Central Excise, Ahmedabad-II (2023) 13 Centax 93 (S.C.). It held that reliance on an overruled judgment vitiates the legal foundation of the order, and rejected the Revenue’s argument that the Tribunal’s findings stood independently. As Commissioner v. Cadila Healthcare Ltd. [2013 (30) S.T.R. 3 (Guj.) was the core basis of the Tribunal’s reasoning, the Court set aside the impugned order and remanded the matter for fresh consideration, keeping all contentions open.
List of Cases Reviewed
- L&T Construction Equipment Ltd v. Commissioner — Final Order Nos. 20273-20280/2022, dated 10-8-2022 by CESTAT, Bangalore — Reversed [Para 1]
List of Cases Cited
- Cadila Healthcare Ltd. v. Commissioner — 2013 (30) S.T.R. 3 (Guj.) — Referred [Paras III, IV]
- Zydus Lifesciences Limited v. Commissioner — 2024 (80) G.S.T.L. 338 (S.C.) = (2023) 13 Centax 93 (S.C.) — Relied [Para III]
