By TIOL News Service

AHMEDABAD, DEC 01, 2014: THIS is an appeal filed by revenue against the order of Tribunal. The assessee paid service tax under construction service by availing abatement and started paying service tax under works contract service with effect from 01.06.2007. It is the contention of revenue that the development charges received by the assessee are taxable under Real Estate Agent service and the assessee cannot reclassify the service of construction under Works Contract service with effect from 01.06.2007. The Tribunal allowed the appeal of assessee and the revenue is before the High Court.

The respondent assessee raised a preliminary objection on maintainability of the appeal before the High Court as the issue relates to determination of rate of tax or value of the service as the same stands excluded in terms of Section 35 G of the Central Excise Act, 1944.

After hearing both sides, the High Court held:

The first question proposed by the appellant is as to whether the Tribunal has committed a serious error in interpreting the definition of "Real Estate Agent" defined under section 65(88) of the Finance Act, 1994 by not finding the respondent herein liable for discharge of service tax under the category of Real Estate Agent Service for the amount received by them as development charges. The Tribunal, in the impugned order has held that the service rendered by the assessee does not get covered under the category of real estate agent services. Evidently, therefore, the dispute involved in the present case relates to whether the activity carried out by the assessee is a service within the meaning of such expression as defined under the Finance Act, 1994; or whether such service falls under the category of taxable service under sub-section (105) of section 65 of the Finance Act, 1994. Therefore, the controversy involved in the present case is a classification dispute which has a direct and proximate relation to the rate of service tax or the value of any service. Consequently, this court has no jurisdiction to adjudicate upon the said controversy.

However, on behalf of the appellant revenue, it was submitted that the impugned order passed by the Tribunal is a non-reasoned and non-speaking order and as such, if the court considers the appeal to the limited extent of the above infirmities in the impugned order, no question of rate of duty or value of service would be required to be adjudicated and the High Court would be duly empowered to decide the same. But the High Court held this issue has not been raised in the appeal memorandum and even otherwise, the submission that the impugned order suffers from the infirmity of being a nonspeaking and non-reasoned one, is not borne out from the record of the case.

Accordingly, the High Court dismissed the appeal filed by revenue.

(See 2014-TIOL-2089-HC-AHM-ST)