2012 (10) TMI 836 - HC - Service Tax

Whether department can file appeal with HC u/s 35 with regard to applicability of rate of service tax Held that - As per Sec.35G, 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. Following the decision of Karnataka HC in the case of Prakash Air Freight (P.) Ltd. (2011 (4) TMI 581). This case, falls squarely within the phrase determination of any question relating to rate of service tax and it is the Apex Court alone which has exclusive jurisdiction to decide the said question u/s 35-L.

Summary

Issues:
1. Jurisdiction of High Court under Section 35-G of the Central Excise Act, 1944.
2. Applicability of rate of service tax and the correct forum for appeals.

Analysis:
1. The primary issue in this case revolves around the jurisdiction of the High Court under Section 35-G of the Central Excise Act, 1944. The appellant raised two substantial questions of law regarding the performance of services outside India and the partial performance of taxable services abroad. However, the respondent contended that the appeal under Section 35-G would not be maintainable in the High Court if the dispute pertains to the rate of service tax.

2. The respondent argued that when the rate of service tax is in dispute, the appeal should be directly filed with the Apex Court under Section 35-L(b) of the Act. This argument was supported by the provisions of law, specifically Section 35-G(1) and Section 35-L(b), which clearly delineate the jurisdiction of the High Court and the Apex Court concerning questions related to the rate of duty or value of goods for assessment purposes.

3. The High Court, after considering the provisions of law and a similar judgment by the Karnataka High Court, concluded that since the dispute in the present case pertained to the rate of service tax, the appeal was not maintainable under Section 35-G. The High Court concurred with the view that the Apex Court holds exclusive jurisdiction to decide questions related to the rate of service tax under Section 35-L of the Act.

4. Consequently, the High Court dismissed the tax appeal with liberty granted to the appellant to file an appeal under Section 35-L(b) of the Act directly before the Apex Court. The High Court clarified that as the question of law proposed by the Department regarding the rate of service tax was not examined, the appropriate forum for such disputes lies with the Apex Court. The notice was discharged, and the case was concluded with directions for the appellant to pursue the appeal in the correct forum.

In summary, the judgment focused on clarifying the jurisdictional aspects under the Central Excise Act, specifically addressing the correct forum for appeals related to the rate of service tax disputes. The High Court's decision highlighted the exclusive jurisdiction of the Apex Court in such matters and guided the parties on the appropriate course of action for resolving the dispute effectively.