2014 (12) TMI 127 - HC - Service Tax

Maintainability of appeal - Classification of service - Real Estate Agent or Commercial and Industrial Construction services - Nature of amount received by the assessee as development charges - Withdrawal from work contract composition scheme - switching over from Commercial or Industrial Construction Service and Construction of Complex Service to Works Contract Service for the projects which were already under execution on 01.06.2007 - In-eligible benefit of abatement from the gross value - Benefit of Notification No.12/2003 - Held that - The Tribunal in the impugned order has held that the service rendered by the assessee does not get covered under the category of real estate agent services. Evidently therefore the dispute involved in the present case relates to whether the activity carried out by the assessee is a service within the meaning of such expression as defined under the Finance Act 1994; or whether such service falls under the category of taxable service under sub-section (105) of section 65 of the Finance Act 1994. Therefore the controversy involved in the present case is a classification dispute which has a direct and proximate relation to the rate of service tax or the value of any service. Consequently this court has no jurisdiction to adjudicate upon the said controversy. However on behalf of the appellant the learned counsel has submitted that the impugned order passed by the Tribunal is a non-reasoned and non-speaking order and as such if the court considers the appeal to the limited extent of the above infirmities in the impugned order no question of rate of duty or value of service would be required to be adjudicated and this court would be duly empowered to decide the same. On a plain reading of the impugned order passed by the Tribunal it is apparent that the contention raised by the learned counsel for the appellant that the order passed by the Tribunal is a non-reasoned and non-speaking one and that merely after reproduction of the decision of this Court in the case of Sujal Developers (2011 (4) TMI 1023 - Gujarat High Court) the Tribunal has held that the issue involved in the present case is squarely covered by the said judgement lacks merit and is contrary to the facts of the case. Under the circumstances the submission that the impugned order suffers from the infirmity of being a nonspeaking and non-reasoned one is not borne out from the record of the case. The contention advanced by the learned counsel for the appellant that the appeal be limited to the question as to whether the impugned order passed by the Tribunal is non-reasoned and nonspeaking one does not merit acceptance. The issue involved in the present case has therefore a direct and proximate relation to the rate of service tax and the value of services and as such this court lacks the jurisdiction to entertain this appeal and the appeal would lie before the Supreme Court under section 35L of the Central Excise Act 1944. - Writ petition dismissed.

Summary

Issues Involved:
1. Whether the Tribunal erred in interpreting the definition of "Real Estate Agent" under section 65(88) of the Finance Act, 1994.
2. Whether the Tribunal correctly applied the provisions of the Works Contract (Compensation Scheme for Payment of Service Tax) Rules, 2007.
3. Whether the assessee's action of switching from "Commercial or Industrial Construction Service" to "Works Contract Service" for ongoing projects as of 01.06.2007 was legal.
4. Whether the appeal should be dismissed on the ground of maintainability, given that the issue relates to the rate of duty or value of services.

Detailed Analysis:

1. Interpretation of "Real Estate Agent":
The Tribunal determined that the development charges received by the assessee did not fall under the category of 'Real Estate Agent' services. It concluded that the amount received was in the form of profit and thus not liable for service tax under this category. The Tribunal relied on the decision of the High Court in the case of Sujal Developers, which stated that such charges are not covered under 'Real Estate Agent' services.

2. Application of Works Contract Rules, 2007:
The Tribunal held that the assessee was entitled to shift from commercial and industrial construction services to works contract services post 01.06.2007. The Tribunal found that the assessee correctly discharged the service tax liability by availing the abatement as provided under Notification No. 12/2003.

3. Legality of Switching Service Categories:
The Tribunal found that the assessee's action of switching from "Commercial or Industrial Construction Service" to "Works Contract Service" for ongoing projects as of 01.06.2007 was legal. The Tribunal noted that the assessee had paid Value Added Tax on the impugned activity as works contract, thus validating the switch.

4. Maintainability of Appeal:
The respondent contended that the appeal should be dismissed as it related to the rate of duty or value of services, which falls under the jurisdiction of the Supreme Court as per section 35L of the Act. The High Court agreed, noting that the issues involved were classification disputes directly related to the rate of service tax or the value of services. The court referred to various precedents and statutory provisions to conclude that such matters should be adjudicated by the Supreme Court, not the High Court.

Conclusion:
The High Court dismissed the appeal on the preliminary ground of non-maintainability. It held that the issues raised were directly related to the rate of service tax and the value of services, thus falling under the jurisdiction of the Supreme Court. The court also rejected the appellant's contention that the Tribunal's order was non-reasoned and non-speaking, finding that the Tribunal had adequately addressed the issues and provided reasons for its conclusions.