The Delhi High Court recently rejected a service tax matter observing its lack of maintainability, while advising the Revenue to approach the Supreme Court under Section 35L of the Central Excise Act, 1944 to determine the taxability of the concerned service.
The decision was given by the High Court against Petitions filed by the Commissioner of Central Tax, Central Goods and Service Tax (CGST), Delhi against JMD Limited, a real-estate enterprise. The Petitions challenge the impugned order passed by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) which set aside the order-in-original passed by the Directorate General of Central Intelligence (Adjudication Cell) imposing a service tax amounting to Rs. 4,97,55,251/- on the Respondent.
The Respondent entity had developed real-estate projects at Ludhiana and Gurugram, and was slapped with Show-Cause Notice dated 14th October 2014 from the Director General of Central Excise Intelligence raising a service tax demand contending that the services provided by the Assessee qualifies to be ‘commercial or industrial construction service’ as per Section 65 (25b) of the Finance Act, 1994 and taxable under Section 65 (105) of the Act.
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JMD Limited refuted the service tax demand, holding that the services rendered by them were of the nature of composite work contracts involving transfer of goods and services as opposed to the allegations of the service being ‘commercial or industrial construction’. The submissions raised by JMD Limited were acceded to by the CESTAT, leading to the present appeal before the Delhi High Court.
The Division Bench of Justice Prathiba M. Singh and Justice Amit Sharma observed that since the core issue surrounds taxability of a service, the decision of the CESTAT would have to duly be assailed before the Supreme Court in terms of Section 35L of the Central Excise Act, 1944.
Referencing the settled position of law as per the recent Decision of the same bench in Commissioner of CGST and Central Excise, Delhi v. M/s Spicejet Ltd. (2024) which referred the decision of a co-ordinate Bench in Commissioner of CGST and Central Excise, Delhi v. M/s Spicejet Ltd. (2022) wherein was held that “that it is now well settled that when the question of chargeability of an activity is concerned – such as in this case – appeal would lie to the Supreme Court and would not be maintainable before this court.”
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Conforming to the precedential matters, the Delhi High Court rejected the Appeal of the Revenue, advising the authority to avail remedies remedies under Section 35L of the Central Excise Act, 1944 while keeping open their eligibility to claim benefit under Section 14 of the Limitation Act, 1963 for the period during which the present matter was sub-judice before the High Court.
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