BY SRI. ARAVIND v. CHAVAN
Case Details
- 1 - NC: 2025:KHC:10166-DB CEA No. 1 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 11TH DAY OF MARCH, 2025 PRESENT THE HON'BLE MR JUSTICE KRISHNA S DIXIT AND THE HON'BLE MR JUSTICE RAMACHANDRA D. HUDDAR CENTRAL EXCISE APPEAL NO. 1 OF 2023 BETWEEN: M/S L AND T CONSTRUCTION EQUIPMENT LTD (FORMALLY KNOWN AS L AND T KOMATSU LTD) COMPANY INCORPORATED UNDER COMPANIES ACT OF 1956 27/28, THAMMASHETTIHALLI KASABA HOBLI DODDABALLAPUR TALUK BANGALORE RURAL, PIN-561 203
Legal Reasoning
on the position of law declared by the Apex Court in Zydus supra. b) We find force in the submission of Mr.Holla that the Tribunal has decided the lis mainly placing reliance on the decision of Gujarat High Court in Cadila supra. He is right in telling us that the correct position of law having been declared by the Apex Court in Zydus supra, the impugned order of the Tribunal has become unsustainable. c) We do not agree with the contention of learned Panel Counsel appearing for the Revenue that even de hors the decision in Cadila, the impugned order is sustainable on its own strength. A perusal of the order apparently shows that Cadila happens to be its corner stone. If such a stone is removed, the super-structure - 7 - NC: 2025:KHC:10166-DB CEA No. 1 of 2023 cannot stand. On this simple logic, the impugned order is liable to be set at naught and matter be remanded for consideration afresh, keeping open all contentions of the parties.
Arguments
REPRESENTED BY ITS HEAD-FINANCE AND ACCOUNTS MR. L. SRIVATHSAN S/O LAKSHMINARAYANAN AGED ABOUT 57 YEARS Digitally signed by SHAKAMBARI Location: HIGH COURT OF KARNATAKA (BY SRI. UDAYA HOLLA, SENIOR COUNSEL A/W SRI. MOHAN MAIYA G.L AND SRI. PRITHWIRAJ CHOUDURI, ADVOCATES) AND: …APPELLANT THE COMMISSIONER CENTRAL TAX BANGALORE NORTH COMMISSIONERATE NO.59, HMT BHAVAN GROUND FLOOR, BELLARY ROAD BENGALURU-560 032 (BY SRI. ARAVIND V. CHAVAN, ADVOCATE) …RESPONDENT - 2 - NC: 2025:KHC:10166-DB CEA No. 1 of 2023 THIS CENTRAL EXCISE APPEAL IS FILED UNDER SEC.35G OF THE CENTRAL EXCISE ACT, 1944, PRAYING TO DECIDE THE SUBSTANTIAL QUESTIONS OF LAW RAISED IN PARAGRAPH 52 TO 59 OR SUCH OTHER QUESTIONS AS THIS HON'BLE COURT MAY FORMULATE IN FAVOUR OF THE APPELLAN AND THAT THIS HON'BLE COURT BE PLEASED TO SET ASIDE THE IMPUGNED FINAL ORDER NO.20274 (PASSED IN COMMON ORDER 20273-20280) DATED 10.08.2022 VIDE ANNEXURE-A PASSED BY THE HON'BLE TRIBUNAL IN APPEAL NO. E288/2011 TO THE EXTENT IT IS ADVERSE TO THE APPELLANT AND ETC. THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE KRISHNA S DIXIT and HON'BLE MR JUSTICE RAMACHANDRA D. HUDDAR ORAL JUDGMENT (PER: HON'BLE MR JUSTICE KRISHNA S DIXIT) Assessee has preferred this appeal under Section 35-G of the Central Excise Act, 1944 calling in question CESTAT order dated 10.08.2022 whereby his Appeal No.E-288/2011 is substantially negatived. II. Appeal is structured on the following substantial questions of law: "52. Whether in the facts and circumstances of the case, the Hon'ble Tribunal erred in not following two decisions - 3 - NC: 2025:KHC:10166-DB CEA No. 1 of 2023 of the co-ordinate Bench, including one that of the same Bangalore Bench, in the cases of Essar Steel India vs. CCE, Surat-I [2016 (335) E.L.T. 660 (Tri. - Ahmd.)] and Federal Mogul (TRP) India Ltd vs. CCE, Bangalore North [2020-VIL-521-CESTAT-BLR-CE]? 53. Whether in the facts and circumstances of the case, the Hon'ble Tribunal was justified in taking a different view against the assessee in violation of principles of judicial discipline instead of referring the matter to a Larger Bench of the Hon'ble Tribunal in the event it differed with the earlier decisions of the Hon'ble Tribunal, including a decision of the Bengaluru Bench itself? 54. Whether in the facts and circumstances of the case, the Hon'ble Tribunal was Justified in placing reliance on the decision of the Hon'ble Gujarat High Court in the case of Commissioner vs. Cadila Healthcare Ltd. [2013 (30) S.T.R. 3] to conclude that the activity carried out by L&T will not qualify as Input Service for the Appellant, despite the fact that a co-ordinate bench on identical facts had held it to be not applicable? 55. Whether in the facts and circumstances of the case, the Hon'ble Tribunal was justified not to consider the applicability of the Explanation to Rule 2(1) of the Credit Rules inserted vide the Notification No. 2/2016-C.E. (N.T.), dated 3-2-2016 (hereinafter referred to as the "Notification"), which has been held by the Co-ordinate Bench to be clarificatory in nature, and hence applicable retrospectively? 56. Whether in the facts and circumstances of the case, the Hon'ble Tribunal was justified in not appreciating the settled position in law that it is the substance of the documents which determine the true nature of the transactions and not its form? 57. Whether in the facts and circumstances of the case, the Hon'ble Tribunal was justified in holding that the activity undertaken by L&T does not get covered under the ambit of the phrase "sales promotion" as contained in the inclusive part of the definition of "Input Service" as defined in Rule 2(1) of the Credit Rules? - 4 - NC: 2025:KHC:10166-DB CEA No. 1 of 2023 58. Whether in the facts and circumstances of the case, the Hon'ble Tribunal was justified in holding that the Appellant has wrongly availed CENVAT Credit of the service tax paid by L&T as the said service does not qualify as "Input Service" as defined under Rule 2(1) of the Credit Rules? 59. Having held that the Appellant has paid sales commission to L&T, was the Hon'ble Tribunal justified in denying CENVAT Credit on an artificial distinction between sales commission and sales promotion expenses since commission is also covered by the definition of "input service" under Rule 2(1) of the CENVAT Credit Rules, 2004?" III. Submissions at the Bar: i) Learned Sr.Advocate Mr.Uday Holla appearing for the Assessee submits that subject appeal including other appeals came to be negatived by the Tribunal placing reliance on Gujarat High Court decision in Commissioner Vs.Cadila Healthcare Ltd., [2013 (30 S.T.R.3]. The said decision no longer holds water in view of Apex Court decision in Zydus Lifesciences Limited V/s. Commissioner of Central Excise, Ahmedabad - II reported in 2023 SCC Online SC 1593; thus, the substratum on which the impugned order was structured having withered away, the same is unsustainable. - 5 - NC: 2025:KHC:10166-DB CEA No. 1 of 2023 ii) Learned Sr.Panel Counsel appearing for the Revenue resists the appeal making submission in justification of the impugned order and the reasons on which it has been constructed. He adds that the Tribunal even otherwise has given its own reasons and therefore, regardless of the decision of Gujarat High Court, the interference of this Court is not warranted. IV. We have heard learned Sr.Advocate Mr.Uday Holla appearing for the appellant and the learned Sr.Panel Counsel representing the Revenue. a) Having heard and having perused the appeal papers, we are framing the following substantial questions of law for consideration, having kept in mind the questions framed by the assessee as above: “i) Whether the Gujarat High Court decision in Cadila is no longer good law in view of subsequent Apex Court decision in Zydus supra…? ii) When High Court decision on which the Tribunal has placed - 6 - NC: 2025:KHC:10166-DB CEA No. 1 of 2023 reliance is reversed or overruled, its order becomes unsustainable, unless it is otherwise sustainable…? We answer the above questions in the affirmative and in favour of the assessee, there being no much disagreement
Decision
Ordered accordingly and appeal is disposed off, costs having been made easy. Sd/- (KRISHNA S DIXIT) JUDGE Sd/- (RAMACHANDRA D. HUDDAR) JUDGE AM/Sk List No.: 1 Sl No.: 24