By TIOL News Service

NEW DELHI, MAR 03, 2014: AS per Section 35G of the CE Act,

An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on or after the 1st day of July, 2003 (not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment), if the High Court is satisfied that the case involves a substantial question of law.

As per Section 35L of the CE Act,

An appeal shall lie to the Supreme Court from any judgment of the High Court delivered (i) in an appeal made under section 35G ;

any order passed before the establishment of the National Tax Tribunal by the Appellate Tribunal relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment.

For Service Tax, Section 83 of the Finance Act stipulates that Sections 35G & L of the CE Act shall mutatis mutandis apply and accordingly, appeals would be made to the High Court and Supreme Court against decisions of the appellate tribunal.

The precise and significant issue which arises for consideration in this appeal is, what is meant by the term 'determination of any question having relation to rate of duty (for service tax) or value (of service) for the purpose of assessment'.

The High Court noted that the issue in question has been answered by Division Bench of this Court in Commissioner of Service Tax vs. Delhi Gymkhana Club Ltd. - (2009-TIOL-460-HC-DEL-ST) wherein the Division Bench referred to a similar argument raised by the Revenue, rejecting the same it was held:

"He submitted that though the present appeal has been filed under Section 35G of the Act but the dispute relates to the levy of the service tax against the respondent under the Finance Act, 1994 which is defined under Section 65 (66 & 67) of the said Act. The classification of the taxable service is defined in Section 65A of the Finance Act, 1994. The charge of service tax within India and outside India is provided under Section 66 and 66A of the said Act. According to him, what will be the valuation of taxable service for charging service tax is well-defined under Section 67 as well as the Service Tax (Determination of Value) Rules, 2006 vide Notification No. 12/2006-ST dated 19.4.2006. Thus, he argued that in the present appeal there is no question regarding any right of duty or value of goods for the purpose of assessment of any duty. The only question is as to whether the respondent is liable to pay service tax for the services rendered by it in view of Section 65 read with Sections 67 and 105 of the Finance Act.

This argument needs outright rejection. Appeal provision is Section 35G, under which these appeals are filed. Therefore, that provision, along with Section 35L, is to be considered (as already done) to decide the issue of maintainability. Moreover, the aforesaid argument will not change the character of the dispute. As is clear from the order of the Appellate Tribunal, in essence, the question that is decided relates to rate of duty. Whether nomenclature thereof is given as service tax, it is the rate of duty of that tax which would essentially fall for consideration. Against such a decision, appeal is filed by the appellant under Section 35G of the Act which would not be maintainable in view of the decision of the Supreme Court in Naveen Chemicals (supra), as discussed in detail above. The remedy for the appellant is to file appeal under Section 35L of the Act, which lies to the Supreme Court ."

The High Court referred to a large number of decisions and held that Delhi Gymkhana Club needs no review or reference to a Larger Bench.

Based on this, the High Court decided several appeals as to whether they are to be with the High Court or Supreme Court.

CEAC 12/2013, CST v. Ernst & Young Pvt. Ltd.

The substantial questions of law raised by Commissioner read as under :-

"Whether providing assistance required for complying with regulation of services like RBI, FIB ,IEC fling and taxation compliance like filing of income tax returns, filing of returns with the office of Registrar of Companies, filing of Sales Tax returns and other returns under Sales Tax/ Central Sales Tax Act and providing compliance, assistance under various laws will fall within the ambit of "Management Consultancy Services" which are taxable under Section 65(105)(r) of the Finance Act, 1994 as applicable during the period from 2001-02 to 2004-05?

Whether extended period of five years can be invoked in the present case under provisions of Section 73(1) of the Finance Act, 1994 as amended?"

Held : The primary issue and question is whether Section 65(105) (r) was applicable in respect of the said activities and in case it was not applicable, no service tax was payable. The rate of tax would be "Nil". As held above, Section 83 of the F. Act read Section 35G of the CE Act is not applicable and, therefore, the present appeal is not maintainable before the High Court.

CEAC 40/2013, CST v. M/s BSR and Co.

Substantial questions of law raised by the Revenue read :-

"Whether the respondent herein is liable to pay service tax on fees charged for services rendered for complying with different types of laws in the country and also on representational service under section 56(105)(r) read with section 65(65) of the Finance Act, 1994?"

Held : The issues involved in this case are identical and similar to the issues involved in CEAC 12/2013. In fact, the tribunal has followed the judgment in the case of Ernst & Young Pvt. Ltd. The present appeal accordingly will not be maintainable before the High Court under Section 83 of the F. Act read with Section 35G of the CE Act.

CEAC 53/2013, 54/2013, 55/2013, 56/ 2013 , CST v. Interocean Shipping (I) Pvt. Ltd.

The substantial question of law raised in the present appeal by the Revenue reads :-

"Whether providing the services acting as ship brokers can be treated Commission Agents of the ship owner or ship charterer and thus are covered by the definition of Business Auxiliary Service as defined under Section 65(19) read with Section 65(105)(zzb) of the Finance Act, 1994 as applicable during the period October, 2003 to September, 2009?"

Held : The question raised is whether the assessee was liable to pay service tax under Section 65(105) (zzb) of the F. Act. Case of the assessee is that they were not liable as the activities undertaken were non-taxable. The dispute would fall in the category of "rate of tax". Hence, the present appeals would not be maintainable before the High Court under Section 83 of the F. Act read with Section 35G of the CE Act.

CEAC 25/2013, CST v. M/s Ultratech Concrete Ltd.

The substantial question of law raised in the present appeal by the Revenue reads :-

"Whether the contract between the parties for supplying Ready Mix Concrete (RMC) along with transporting, pumping, pouring, placing, spreading, laying of RMC at the construction sites is a taxable service under the Finance Act, 1994?"

Held : The assessee had supplied ready-mix cement to third parties-purchasers. Stand of the appellant-Revenue is that the assessee had rendered and was engaged in construction service or commercial or industrial construction service as defined in Section 65 (30a)/65(25b)/65(105)(zzb). The question raised in the present appeal would also relate to rate of duty as the assessee claims that the activity undertaken was not taxable. Thus, the appeal would not be maintainable before the High Court under Section 83 of the F. Act read with Section 35G of the CE Act.

CEAC 29/2013, CST v. M/s GMK Concrete Mixing Pvt. Ltd.

The substantial question of law raised in the present appeal by the Revenue reads :-

"Whether the contract between the parties for supplying Ready Mix Concrete (RMC) along with transporting, pumping, pouring, placing, spreading, laying of RMC at the construction sites is a taxable service under the Finance Act, 1994?"

Held : The question of law or the issue raised is identical to the question/issue raised in CEAC 23/2013, CST v. M/s Ultratech Concrete Ltd. The present appeal, therefore, would not be maintainable. The subject matter of adjudication relates to rate of duty.

CEAC 39/2013, CST v. M/s Bharti Televentures Ltd.

The substantial question of law raised in the present appeal by the Revenue reads as under :-

"Whether the "Liaison charges" charged by the party for the "Liaison work" would merit to be considered as taxable services under the ambit of "Management Consultancy Services" which are taxable under Section 65(105)(r) of the Finance Act, 1994?"

Held : The question raised is whether liaison charges/management support charges were taxable and fall under the ambit of the "management consultancy service" defined under Section 65(105) (r) of the Act. The question relates to rate of tax as no tax would be payable in case the stand of the respondent-assessee is accepted. The present appeal under Section 83 of the F. Act read with Section 35G of the CE Act is not maintainable before the High Court.

CEAC 26/2013, CST v. Aryan Cool Beneficiation Pvt. Ltd.

The substantial questions of law raised in the present appeal by the Revenue reads as under :-

"Whether the benefication/washing of coal activity carried out by the party prior to period 1.06.2007 is covered by the category of "Business Auxiliary Services?

Whether the activity of loading/unloading of the coal carried out by the party for bringing the coal into washery would fall under the category of "Cargo Handling Services?"

Held : The respondent-assessee is engaged in the activity of washing of coal, which they claim amounts to manufacturing and, therefore, was not covered under the head "business auxiliary service" or "cargo handling service". Loading and unloading of coal was done by the respondent-assessee and they were not providing services to a third person. For the purpose of beneficiation of coal, raw coal had to be brought to their washeries, washed and re-supplied and for this purpose coal was loaded and unloaded. In this appeal again, the issue relates to rate of tax i.e. whether the said activities were taxable as "business auxiliary service" or "cargo handling service". Hence, the present appeal also would not be maintainable before the High Court under Section 83 of the F. Act read with Section 35G of the CE Act.

ST Appeal 2/2012, CST v. Oberoi Flight Services

The substantial question of law raised in the present appeal by the Revenue reads :-

"Whether services rendered by the assessee would be taxable under the category of "Airport Services" or "otherwise"?

Held : The respondent-assessee operates an executive lounge at the Indira Gandhi International Airport, New Delhi under a licence granted to them by the Airport Authority of India. Bonafide passengers of the airlines, who produce lounge card, were allowed to use the lounge. The question raised is whether the said services were covered under Section 65(105)(zzm) and, therefore, taxable as "airport service". Tribunal decided the issue in favour of the assessee and has held that the activities were not covered under the head "airport service". Observations on whether the said service falls under the head "business auxiliary service" have been made, but it was observed that the said aspect was not relevant as it was not the subject matter of the adjudication order. The question raised in the present appeal also relates to rate of tax as the issue is whether the respondent-assessee was providing "airport services" under Section 65(105)(zzm) of the F. Act or "services" could have been taxed otherwise .

ST. Appeal 1/2012, CST v. ITC Welcome Group Port Lounge

The substantial question of law raised in the present appeal by the Revenue reads as under :-

"Whether services rendered by the assessee would be taxable under the category of "Airport Services" or otherwise?"

Held : The issue raised in the present appeal is identical to the issue involved in ST Appeal No.2/2012 in the case of Oberoi Flight Services. Accordingly, the present appeal too would not be maintainable as it relates to rate of duty.

In view of the findings recorded above, the aforesaid appeals are not maintainable before the High Court under Section 83 of the F. Act read with Section 35G of the CE Act.

(See 2014-TIOL-263-HC-DEL-ST)