2014 (2) TMI 1133 - HC - Service Tax

Maintanability of appeal before High Court - Jurisdiction - what is meant by the term determination of any question having relation to rate of duty (for service tax) or value (of service) for the purpose of assessment - Invocation of extended period of limitation - revenue prayed to refer the matter to larger bench - Held that - Determination of any question relating to rate of tax would necessarily directly and proximately involve the question, whether activity falls within the charging Section and service tax is leviable on the said activity. The said determination is integral and an important injunct to the question of rate of tax. In case service tax is not to be levied or imposed and cannot be imposed under the charging Section, no tax would be payable. The said determination would be direct or proximate to the issue of rate of tax, which will include nil tax, when no tax is chargeable. The words rate of tax in relation to rate of tax would include the question whether or not the activity is exigible to tax under a particular or specific provision. This will be a reasonable and appropriate interpretation and will not cause or result in confusion or ambiguity regarding the appellate forum. Line between exigibility and rate of tax as propounded can be rather thin and superfluous in the present statutory context. Prayer of the Revenue to refer the matter to Larger Bench rejected - We are bound by the decision of the Division Bench of this Court in the case of Delhi Gymkhana Club Ltd. (2009 (8) TMI 65 - DELHI HIGH COURT) and respectfully following the ratio for the reasons set out above. We shall now examined facts of each of the present appeals to decide and determine whether they are maintainable under Section 83 of the F. Act read with Section 35G of the CE Act. In an present appeal the primary issue and question is whether Section 65(105) (r) was applicable in respect of the said activities and in case it was not applicable, no service tax was payable. The rate of tax would be Nil . As held above, Section 83 of the F. Act read Section 35G of the CE Act is not applicable and, therefore, the present appeal is not maintainable before the High Court. - all appeals dismissed involving similar cases - Decided against Revenue.

Issues Involved:
1. Interpretation of "determination of any question having relation to rate of duty or value for the purpose of assessment" under Section 35G and 35L of the Central Excise Act (CE Act).
2. Applicability of Section 65(105) of the Finance Act (F. Act) for various services.
3. Classification of services and their taxability under specific provisions of the F. Act.
4. Maintainability of appeals before the High Court under Section 83 of the F. Act read with Section 35G of the CE Act.

Detailed Analysis:

Issue 1: Interpretation of "determination of any question having relation to rate of duty or value for the purpose of assessment"
The court examined the interpretation of the term "determination of any question having relation to rate of duty or value for the purpose of assessment" under Section 35G and 35L of the CE Act. It was noted that Section 83 of the F. Act stipulates that Sections 35G and 35L of the CE Act shall apply mutatis mutandis to service tax. The court held that the phrase "rate of duty" or "value" of service should not be construed narrowly to only mean the rate of duty payable or the valuation of services. Instead, it should include questions about whether an activity is a taxable service under the charging section, Section 65(105) of the F. Act. The court emphasized that the determination of whether an activity is taxable directly relates to the rate of tax, which could be nil if the activity is not taxable.

Issue 2: Applicability of Section 65(105) of the Finance Act
The court addressed several appeals where the applicability of Section 65(105) of the F. Act was in question. For instance, in CEAC 12/2013, the issue was whether regulatory compliance services fell under "Management Consultancy Services" as defined in Section 65(105)(r) of the F. Act. The court concluded that if the services were not taxable under this section, the rate of tax would be nil, making the appeal not maintainable before the High Court.

Issue 3: Classification of Services and Their Taxability
The court examined various cases to determine the correct classification of services and their taxability:
- In CEAC 53/2013, the issue was whether ship brokerage services were taxable under "Business Auxiliary Services" as defined in Section 65(19) read with Section 65(105)(zzb) of the F. Act. The court held that the question related to the rate of tax and thus, the appeal was not maintainable before the High Court.
- In CEAC 25/2013, the issue was whether the supply of Ready Mix Concrete (RMC) along with associated services was taxable under the F. Act. The court ruled that this also related to the rate of duty, making the appeal not maintainable.

Issue 4: Maintainability of Appeals Before the High Court
The court consistently held that appeals involving questions of whether an activity is taxable (and thus, the rate of tax) are not maintainable before the High Court under Section 83 of the F. Act read with Section 35G of the CE Act. The court referred to the decision in Commissioner of Income Tax vs. Delhi Gymkhana Club Ltd. and other relevant judgments to support this view. The court emphasized that questions about the chargeability or levy of tax directly relate to the rate of tax and should be appealed to the Supreme Court under Section 35L of the CE Act.

Conclusion:
The court concluded that the appeals in question were not maintainable before the High Court as they involved issues relating to the rate of tax or the value of services for the purpose of assessment. The preliminary objections raised by the respondents were accepted, and the appeals were dismissed. The court's orders and observations in any earlier orders in these appeals were recalled and annulled. No costs were awarded.

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