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2022 (11) TMI 562 - HC - Service TaxJurisdiction of High Court to entertain the appeal - Levy of service tax - clearing and forwarding agent service or not - specific case of the appellant was that the appellant was not providing any taxable service of a clearing and forwarding agent to M/s.Grasim Industries Ltd. as it was not physically dealing with the goods namely, cement on behalf of its client M/s.Grasim Industries Ltd. - HELD THAT - If the dispute pertained to claim or denial of benefit of exemptions under a Notification under Section 93 of the Finance Act, 1944 Chapter V Service Tax Act , it could be said that it pertained to a dispute relating to the rate of tax and therefore, this Court was barred under the exclusions in Section 35-G of the Central Excise Act, 1944. In such case, only the Hon ble Supreme Court has the exclusive jurisdiction under Section 35L of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1944 - the High Court has jurisdiction to entertain the appeal against an order of the Tribunal determining the taxability of a service under the provisions of the Finance Act, 1944 Chapter V Service Tax Act as the dispute was not relevant to valuation or rate of tax. The decision of this Court in S. Senniappa Mudaliar V. The Government of Madras, 1964 (9) TMI 91 - MADRAS HIGH COURT was followed by a Full Bench of the Kerala High Court in M.Syed Alavi and Others Vs. State of Kerala , 1981 (5) TMI 113 - KERALA HIGH COURT . It held that an order of remand remanding a case back is to be held as an interlocutory order. The Court further held that while the authority passing order pursuant to remand order was bound by remand order, the Appellate Courts / Authorities are not bound by it. The activity carried out by the appellant was not that of the clearing and forwarding agent as the appellant was not physically handling the goods on behalf of its client Therefore, though the Tribunal had earlier concluded that the appellant was liable to pay the service tax as that of a clearing and forwarding agent vide Final Order No.808/2005 dated 03.06.2005 impugned in C.M.A.No.951 of 2008 2005 (6) TMI 5 - CESTAT, CHENNAI , nothing precluded the Tribunal from revisiting the issue afresh while passing the impugned Final Order No.1296/2009 dated 09.09.2000 which has been impugned in C.M.A.No.696 of 2010. Appeal allowed.
Issues Involved:
1. Whether the appellant was providing taxable service as a clearing and forwarding agent. 2. Whether the Tribunal was correct in its interpretation of the definitions under the Finance Act, 1994. 3. Whether the Tribunal's decision to impose penalties was justified. 4. Whether the invocation of the extended period for demand of tax was appropriate. 5. Jurisdiction of the High Court under Section 35G of the Central Excise Act, 1944 as applicable to the Finance Act, 1994. Issue-wise Detailed Analysis: 1. Taxable Service as Clearing and Forwarding Agent: The appellant contended that they were not providing services as a clearing and forwarding agent since they did not physically handle goods. Instead, they maintained records, party ledgers, credit/debit notes, and attended to insurance claims for M/s. Grasim Industries Ltd. The Department argued that the appellant was indirectly providing clearing and forwarding operations, thus liable for service tax. The Deputy Commissioner confirmed the tax liability based on the CEGAT decision in Prabhat Zarda Factory (India) Limited Vs. Commissioner of Central Excise and the Central Board of Excise and Custom's clarifications. 2. Tribunal's Interpretation of Definitions: The Tribunal initially concluded that the appellant was liable to pay service tax as a clearing and forwarding agent. However, on remand, the Tribunal found that the appellant's activities did not fall under this category, as they did not physically handle goods. The Tribunal's reliance on the Punjab & Haryana High Court's decision in Commissioner Vs. Kulcip Medicines supported this conclusion. 3. Imposition of Penalties: The Tribunal, in its remand order, upheld the appellant's tax liability but set aside the penalty, acknowledging that the appellant did not physically handle goods and was paid a commission based on the quantum of goods dispatched by M/s. Grasim Industries Ltd. 4. Invocation of Extended Period for Demand of Tax: The appellant questioned the Tribunal's decision to restrict its finding to the issue of penalty and not address the extended period of demand under Section 73 of the Finance Act. The Tribunal had concluded that the appellant's activities did not constitute clearing and forwarding operations, thus affecting the basis for invoking the extended period. 5. Jurisdiction of the High Court: The High Court clarified its jurisdiction under Section 35G of the Central Excise Act, 1944, as applicable to the Finance Act, 1994. The Court held that it had jurisdiction to entertain the appeal against the Tribunal's order determining the taxability of a service, as the dispute did not pertain to valuation or rate of tax but to the nature of the service provided. Conclusion: The High Court concluded that the Tribunal, in its final order, correctly determined that the appellant's activities did not constitute clearing and forwarding services. The Court also noted that the Tribunal was not precluded from revisiting the issue afresh in its remand order. Consequently, the High Court allowed the appeals, answering the substantial questions of law in favor of the appellant, and closed the connected Miscellaneous Petition.
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