Appeal on Service Tax for Educational Construction Not Maintainable: Delhi HC Directs Revenue to Approach Supreme Court u/s 35L of CEA [Read Order]

The Delhi High Court has dismissed an appeal filed by the Commissioner of Service Tax holding that the matter was not maintainable before the High Court and directing the Revenue to approach the Supreme Court instead.

The matter, concentrating on the inclusion of service tax to construction services rendered to educational institutions, shows the limits of jurisdiction in tax appeals and upholds long-standing precedents.

The dispute originated from a Show Cause Notice dated April 22, 2014, demanding service tax amounting to ₹15.90 crore from Globe Civil Projects Pvt. Ltd. for various services, including those related to educational institutions.

Also read: CESTAT upheld the demand for service tax as it was non-payment of service tax on an act of suppression to evade payment of duty [Read Order]

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However, the Adjudicating Authority, through an Order-in-Original dated July 21, 2015, determined that construction services provided to educational institutions were not taxable under the Finance Act, 1994, and confirmed a minuscule amount of ₹22,661, limited to Goods Transport Agency services, along with applicable interest.

Dissatisfied with this ruling, the Department filed an appeal before the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT). The Tribunal, through its Final Order dated March 3, 2025, upheld the findings of the Adjudicating Authority, effectively providing relief to the assessee.

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The Department then sought to challenge the Tribunal’s decision before the Delhi High Court under Section 35G of the Central Excise Act, 1944, read with Section 83 of the Finance Act, 1994.

During the High Court proceedings, the issue of maintainability of the appeal came under scrutiny. The court, relying on precedents, including the Delhi High Court’s decision in Commissioner of CGST and Central Excise Delhi South v. SpiceJet Ltd, it stated that where the matter involves the determination of the rate of service tax or valuation of taxable services, the appeal lies directly to the Supreme Court under Section 35L of the Central Excise Act, 1944.

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Also read: Confirmation of Service Tax Higher than Proposed Demand in SCN is Not Valid: CESTAT [Read Order]

Justices Prathiba M. Singh and Rajneesh Kumar Gupta observed that even though the Tribunal had limited its findings to issues like limitation and minor demands, the core subject matter pertained to the taxability of services, an issue falling squarely within the purview of Section 35L, thus beyond the appellate jurisdiction of the High Court.

Consequently, the Delhi High Court dismissed the appeal as not maintainable, but granted liberty to the Department to approach the Supreme Court and seek appropriate remedies.

Also read: Delhi HC Dismisses Petition of Massive GST Fraud of Rs. 155cr Citing Impact on Exchequer and GST [Read Order]

To Read the full text of the Order CLICK HERE

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