The Meghalaya High Court dismissed the department’s appeal and held that the appeal relating to the value of service does not lie to the High Court under section 35G of the Central Excise Act, 1944. Such an appeal would lie before the Supreme Court under section 35L of the Central Excise Act.
M/s Walchandnagar Industries Limited, the respondent assessee undertook a works contract for the supply, erection, installation and commissioning of the project. The supply included manufactured as well as bought-out items. The revenue bifurcated the contract and demanded service tax on technical assistance rendered during the said project under the “consulting engineer” service.
A demand of about Rs.2 crores was confirmed along with interest and penalty. The assessee filed an appeal before the Central Excise Service Tax Appellate Tribunal ( CESTAT ). The CESTAT analysed the contract and allowed the appeal holding that no consulting engineer service has been provided and no value can be attributed to the rendering of such service. The Revenue, being aggrieved, filed an appeal before the High Court.
The main contention of the respondent is that the right of appeal relating to the value of service is not maintainable before the Court. However, both parties stated that Section 35G deals with appeals to the High Court. At the time of introduction of the National Tax Tribunal Act, 2005 w.e.f. 01.07.2003, the said appeal provision was deleted. In view of the order of the Supreme Court staying the provision, the old provision of Section 35G permitting the aggrieved party to prefer an appeal still exists.
“Though there is an appellate remedy available to the appellant or the aggrieved party in terms of Section 35G, the issue about the value of service cannot be agitated before this Court”, the court held.
A division bench of Chief Justice S. Vaidyanathan and Justice W. Diengdoh held that the party has got right only before the Supreme Court in terms of Section 35L of the Central Excise Act. While rejecting the appeal, the court provided liberty to the appellant to approach the Apex Court, if so advised.
Dr. N. Mozika, DSGI with Ms. L.M.D. Marak appeared for the appellant department and Mr. Bharat Raichandani appeared for the respondent.
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