2024 (7) TMI 1399 - HC - Central Excise

Challenge to assessment order - Board s Circular No.98/1/2008-Service Tax, dated 04.01.2008, issued vide F.No.345/6/2007-TRU - HELD THAT - The CESTAT, Bangalore in Golflinks Software s case 2018 (8) TMI 331 - CESTAT BANGALORE where it was held that 'The Apex Court in the case of Orient Paper Mills Ltd. Vs. UOI 1968 (5) TMI 15 - SUPREME COURT held that Appellate Authority which exercised quasi-judicial power should not be influenced by departmental clarifications and Board Tariff Ruling while adjudicating the cases.' A plain reading of the question framed leaves no room for any doubt that Board s circular became the subject matter of the substantial question. The High Court gave its stamp of approval to the order of authority below and the appeal was dismissed. There exists no substantial question of law, which needs adjudication - Appeal dismissed.

Summary

Issues:
Appeal against Customs, Excise and Service Tax Appellate Tribunal order based on Circular No.98/1/2008-Service Tax; Interpretation of Circular in various High Court judgments; Applicability of Circular in CESTAT Bangalore case; Challenge before Karnataka High Court; Substantial question of law regarding Cenvat credit on inputs for construction of immovable property; Binding nature of Circular vis-a-vis judicial decisions.

Analysis:
The judgment involves an appeal challenging the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) order dated 08.07.2022, which was based on Circular No.98/1/2008-Service Tax issued by the Board. The appellant argued that despite different views in various High Court judgments, the Circular was not discussed or set aside, making the appeal valid due to substantial questions of law. The respondent relied on multiple judgments during the hearing, emphasizing the importance of the Circular in the decision-making process.

The CESTAT Bangalore case, Golflinks Software Park Pvt Ltd v. C.C.E & C.S.T.-Bangalore, played a crucial role in the proceedings. The CESTAT's decision in this case highlighted the conflict between the Circular and established law, leading to the conclusion that the Circular was contrary to statute law. Additionally, the Karnataka High Court addressed the substantial question of law regarding the eligibility of Cenvat credit on inputs for construction of immovable property in light of the Circular, ultimately upholding the authority's decision and dismissing the appeal.

The judgment also delves into the binding nature of Circulars issued by the Board vis-a-vis judicial decisions. Citing the Constitution Bench judgment in Commissioner of C.Ex., Bolpur v. Ratan Melting & Wire Industries, the Court emphasized that Circulars are not binding when the Supreme Court or High Court has declared the law on the matter. The Court agreed with the High Court of Karnataka and other similar judgments, concluding that there was no substantial question of law requiring further adjudication.

In summary, the High Court dismissed the appeal, affirming the decisions of the lower authorities and emphasizing the precedence of judicial decisions over Circulars issued by the Board. The judgment highlights the importance of legal interpretations in determining the applicability and enforceability of executive instructions in tax matters.