Appeals Involving Taxability or Valuation Should Be Filed Directly Before Supreme Court u/s 35L of Central Excise Act: Delhi HC [Read Order]
The Delhi High Court held that appeals involving questions of taxability or valuation must be filed directly before the Supreme Court under Section 35L of the Central Excise Act, 1944
Delhi High Court, Central Excise Act, Supreme Court
Delhi High Court, Central Excise Act, Supreme Court
In a recent ruling, the Delhi High Court held that appeals involving questions of taxability or valuation must be filed directly before the Supreme Court under Section 35L of the Central Excise Act, 1944, and not before the High Court.
The Commissioner of Service Tax, Delhi, filed appeals against the order dated 3 July 2023 passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in favour of Konark Exim Pvt. Ltd. and other respondents.
The CESTAT had dealt with the issue of whether the commission paid by the respondents to overseas companies in Dubai for services connected with the export of readymade garments was taxable under “Business Auxiliary Service” as defined in Section 65(19) of the Finance Act, 1994.
During the hearing, the respondents’ counsel argued that the appeals were not maintainable before the High Court because the issue related to the taxability of services. It was argued that under Section 35L of the Central Excise Act, 1944, any appeal involving the determination of taxability or valuation must be filed before the Supreme Court.
The Revenue’s counsel argued that the CESTAT’s order also involved questions of limitation and that the appeal should be heard by the High Court under Section 35G.
The Division Bench comprising Justice Prathiba M. Singh and Justice Shail Jain observed that the main issue before the CESTAT was the taxability of services under “Business Auxiliary Service.”
The court explained that Section 35G specifically excludes from the High Court’s jurisdiction any appeal relating to the determination of questions connected with the rate of duty or valuation of goods or services for assessment.
The court pointed out that Section 35L provides for such appeals to be filed directly before the Supreme Court.
The court referred to earlier decisions such as Commissioner of Service Tax v. Delhi Gymkhana Club Ltd., Commissioner of Service Tax v. Bharti Airtel Ltd., and Commissioner of Service Tax v. Ernst & Young Pvt. Ltd., which all held that when the issue concerns taxability or valuation, the appeal lies to the Supreme Court.
The court held that the appeals challenged an order that dealt with the taxability of services, so they were not maintainable before the High Court. The revenue was granted liberty to file appeals before the Supreme Court under Section 35L. The court also allowed the department to seek exclusion of the time spent before the High Court under Section 14 of the Limitation Act, 1963.
The appeals were dismissed as not maintainable.
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