2011 (4) TMI 581 - HC - Service Tax

Demand - Courier Agency - Rule 4 of Export of Services Rules, 2005 - whether the assessee is liable to pay service tax for a courier service during the period from 15-3-2005 to 15-6-2005 as the service provided by the assessee constitutes export of service - held that the assessee is in India and the service receiver who hands over the consignment is also in India and therefore it does not constitute export of service and therefore he confirmed the demand of Rs. 17,89,752/- and also held that the assessee is liable to pay interest and penalty - The said provision makes it clear that an appeal shall lie to the High Court from every order not being an order, relating to among other things, to the determination of any question having a relation to the rate of duty on excise or to the value of goods for the purpose of assessment - it is the Apex Court alone which has exclusive jurisdiction to decide the said question under Section 35-L of the Act. - Appeal is rejected

Summary

Issues:
1. Challenge to order on service tax liability for courier service.
2. Interpretation of Export of Services Rules, 2005.
3. Substantial questions of law regarding service tax liability.
4. Jurisdiction of High Court under Section 35-G.

Analysis:

Issue 1: The appeal challenges the order by CESTAT regarding the liability of the courier service for service tax. The assessee provided courier services under the category of 'Courier Agency', with international consignments exempted under Rule 4 of Export of Services Rules, 2005. The Commissioner contended that since the service was provided in India to an Indian service receiver, it did not constitute export of service, demanding payment of service tax, interest, and penalty. The Tribunal, however, held that services should be deemed outside India during the relevant period, setting aside the Commissioner's order.

Issue 2: The Tribunal's interpretation of Rule 3(2) of the Export Service Rules, 2005 deemed the services rendered by the assessees to have been derived outside India, thereby absolving them from service tax liability. This interpretation led to the setting aside of the Commissioner's demand for service tax, interest, and penalty, prompting the revenue to appeal against the Tribunal's decision.

Issue 3: The appeal admitted for consideration substantial questions of law, including whether the service rendered was outside India, whether the service was not liable for service tax as it was rendered outside India, and whether a specific Ministry Circular was applicable. The principal question was whether the courier service provided constituted export of service during the specified period.

Issue 4: The High Court noted that the appeal was filed under Section 35-G, which allows appeals related to questions concerning the rate of service tax. However, the Court held that such questions fall under the exclusive jurisdiction of the Apex Court under Section 35-L, rendering the appeal not maintainable. The appeal was rejected, with the revenue reserved the liberty to approach the Apex Court against the impugned order. The High Court Registry was directed to return the certified copy of the order for the assessee to prefer an appeal to the Supreme Court.