2018 (12) TMI 783 - HC - Central Excise

Maintainability of appeal - Section 35 G and 35 L of the Central Excise Act, 1944 - Section 83 of the Finance Act - whether fleet cards have been provided is a part of loan transaction or is it a credit card facility? Held that - It is pertinent to note that Section 129 D of the Customs Act, is similar to Section 35 G of the Central Excise Act. Hon ble Division Bench of this High Court in THEJO ENGINEERING SERVICES PVT LTD Vs. COMMISSIONER OF CUSTOMS EXCISE, CHENNAI 2015 (7) TMI 1229 - MADRAS HIGH COURT has held that In such a scenario, in view of the above position of law, which exempts appeal to be entertained by the High Court in relation to rate of duty, the objection as raised by the respondent is liable to be sustained in view of the decision of the Supreme Court in Navin Chemicals 1993 (9) TMI 107 - SUPREME COURT OF INDIA . It is clear that an appeal is not maintainable before this Court. Right of appeal to this Court - amendment by way of Section to 35 L of the Central Excise Act, 1944, whether has taken away the right to appeal - Held that - Right of appeal has not been taken away. Instead of an appeal in the High Court, an appeal would lie to the Hon ble Supreme Court. Under the pre-amended regime, there was no second appeal provided to the Supreme Court - The contention of the appellant that pre-amended provision must apply to them as it takes away the right of appeal does not have any force. Appeals are not maintainable and is dismissed.

Summary

Issues Involved:
1. Classification of the service provided by the appellant.
2. Taxability of finance charges and additional finance charges.
3. Maintainability of the appeal before the High Court.

Detailed Analysis:

1. Classification of the Service Provided by the Appellant:
The core issue revolves around whether the services rendered through Fleet Cards by the appellant, a Non-Banking Financial Institution, should be classified as credit card services or as part of loan transactions. The appellant argued that the Fleet Cards were vehicle-specific, usable only at authorized petrol outlets, and issued under a loan/hypothecation agreement, thus categorizing the finance charges as interest on loans exempt from service tax. The Assessing Authority, however, concluded that the Fleet Card operations are akin to credit card services and fall under Section 65 (33a) (iii) of the Finance Act, 1994. This classification was upheld by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), which stated that the Fleet Card operations were similar to credit card services and not loan transactions.

2. Taxability of Finance Charges and Additional Finance Charges:
The show cause notices issued to the appellant asserted that the finance charges and additional finance charges collected under the Fleet Card scheme were subject to service tax. The appellant contended that these charges were in the nature of interest on loans and thus exempt from service tax. However, the Tribunal found that these charges were part of the taxable value for credit card services, rejecting the appellant's argument that the transactions were loan-related. The Tribunal ruled that the finance charges and additional finance charges collected from Fleet Card operations should be classified under credit card services, making them liable for service tax.

3. Maintainability of the Appeal Before the High Court:
The Department raised a preliminary objection regarding the maintainability of the appeal, arguing that issues related to the classification of services and their taxability should be agitated only before the Supreme Court as per Section 35G and 35L of the Central Excise Act, 1944, and Section 83 of the Finance Act, 1994. The High Court examined the jurisdictional aspects and cited several precedents, including the Supreme Court's judgment in Navin Chemicals Manufacturing & Trading Co. Ltd. Vs. Collector of Customs, which clarified that appeals involving the determination of the rate of duty or the value of goods for assessment purposes fall within the Supreme Court's jurisdiction. The High Court concluded that the appeal was not maintainable in the High Court, as the issue pertained to the classification and taxability of services, which should be addressed by the Supreme Court.

Conclusion:
The High Court dismissed the appeals, holding that the classification of Fleet Card operations as credit card services and the associated finance charges as taxable were correctly determined by the lower authorities. The High Court also ruled that it lacked jurisdiction to hear the appeal on the classification and taxability issues, directing that such matters should be appealed to the Supreme Court.