2025 (1) TMI 841 - HC - Central Excise

Maintainability of appeal - appropriate forum - appeal filed under Section 35G of the Central Excise Act 1944 is maintainable before the High Court or not - taxability of services provided to a Municipal Corporation - HELD THAT - Sub-section (2) to Section 35L of the Act was inserted with effect from 6.8.2014 by Section 107 of the Finance Act (2) Act 2014 and that the amendment was clarificatory was accepted by the department. In this regard the Ministry of Finance Department of Revenue Tax Research Unit has issued circular dated 10.7.2014 which refers to the bill introduced in the Lok Sabha by the Hon ble Finance Minister. It has been clarified by the said circular that section 35L is being amended so as to clarify that determination of disputes relating to taxability or excisable of goods is covered under the term Determination of any question having a relation to the rate of duty and hence appeal against Tribunal order in which matters would lie before the Hon ble Supreme Court. This decision was followed by the Hon ble Division Bench of the High Court of Punjab and Haryana in the case of COMMISSIONER SERVICE TAX VERSUS DLF GOLF RESORTS LTD. 2017 (5) TMI 402 - PUNJAB AND HARYANA HIGH COURT . In the said decision it has been held that the appeal does not lie before the High Court under Section 35G of the Act but appeal would lie before the Hon ble Supreme Court under Section 35L of the Act. Conclusion - Disputes relating to the taxability of services fall under the jurisdiction of the Supreme Court not the High Court as clarified by the amendment to Section 35L of the Central Excise Act 1944. The appeal is liable to be dismissed on the ground that it is not maintainable under Section 35G of the Act. Appeal dismissed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the appeal filed under Section 35G of the Central Excise Act, 1944, is maintainable before the High Court, given that the matter pertains to the taxability of services provided to a Municipal Corporation.
Whether the Tribunal's reliance on its previous orders, which are under challenge and pending before the Supreme Court, is justified.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Maintainability of the Appeal under Section 35G

Relevant Legal Framework and Precedents:
Section 35G of the Central Excise Act, 1944, pertains to appeals to the High Court on substantial questions of law. Section 35L, amended by the Finance Act (2) Act, 2014, specifies that appeals on matters related to the taxability or excisability of goods or services should be directed to the Supreme Court. The amendment was clarificatory, as per a circular by the Ministry of Finance.
Court's Interpretation and Reasoning:
The Court interpreted the amendment to Section 35L as clarifying that disputes related to the taxability of services fall under the category of "Determination of any question having a relation to the rate of duty." Therefore, such matters should be appealed to the Supreme Court, not the High Court.
Key Evidence and Findings:
The Court referred to the Ministry of Finance's circular and previous judgments by the Delhi High Court and the Punjab and Haryana High Court, which supported the interpretation that appeals on taxability issues should be directed to the Supreme Court.
Application of Law to Facts:
Since the issue at hand involved the taxability of services provided to a Municipal Corporation, the Court concluded that the appeal was not maintainable under Section 35G and should be directed to the Supreme Court under Section 35L.
Treatment of Competing Arguments:
The respondent's preliminary objection regarding the appeal's maintainability was upheld, and the Court did not address the substantial question of law due to the jurisdictional issue.
Conclusions:
The appeal was dismissed on the grounds of non-maintainability under Section 35G, leaving the revenue to pursue statutory remedies.

Issue 2: Justification of Tribunal's Reliance on Previous Orders

Relevant Legal Framework and Precedents:
The Tribunal's reliance on its previous orders, which are under challenge and pending before the Supreme Court, was questioned. The Court did not delve into this issue due to the dismissal of the appeal on jurisdictional grounds.
Court's Interpretation and Reasoning:
Since the appeal was dismissed on jurisdictional grounds, the Court did not provide an interpretation or reasoning regarding the Tribunal's reliance on its previous orders.
Key Evidence and Findings:
This issue was not addressed due to the preliminary dismissal of the appeal.
Application of Law to Facts:
The Court did not apply the law to the facts regarding this issue, as it was not considered due to the appeal's dismissal on jurisdictional grounds.
Treatment of Competing Arguments:
Competing arguments on this issue were not addressed due to the jurisdictional dismissal.
Conclusions:
The substantial question of law related to this issue was left open for consideration in a proper forum.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning:
The Court stated: "In the above circumstances, the appeal is liable to be dismissed on the ground that it is not maintainable under Section 35G of the Act and, accordingly, the same stands dismissed."
Core Principles Established:
Disputes relating to the taxability of services fall under the jurisdiction of the Supreme Court, not the High Court, as clarified by the amendment to Section 35L of the Central Excise Act, 1944.
Final Determinations on Each Issue:
The appeal was dismissed on the grounds of non-maintainability under Section 35G, and the substantial question of law was left open for consideration in a proper forum.