2022 (10) TMI 882 - HC - Service Tax

Maintainability of appeal - appropriate forum - section 35L of the Excise Act - Classification of services - CHA service or not - revenue earned under the head Break Bulk Fee - revenue generated as airline/airline incentive - Business Auxiliary Service or not - penalty u/s 78 of the Finance Act, 1994 - HELD THAT - Reliance placed upon the respondent s own case DHL LEMUIR LOGISTICS (P.) LTD. VERSUS COMMISSIONER OF SERVICE TAX, BANGALORE 2009 (3) TMI 158 - CESTAT, BANGALORE , wherein it had held that the Break Bulk Fee would not be includable in the computation of service tax towards CHA Services. Revenue earned as freight rebate - HELD THAT - The Tribunal further held that the service tax under the head Business Auxiliary Service could not be charged on the revenue earned as freight rebate inasmuch as the freight rebate was the revenue stream generated out of trading of the space in the airlines incentives, and that unless the airline was booked specifically for a client, the components of Business Auxiliary Service did not come into play. It also held that the appellant (respondent herein) was booking the space for its own trading activities, and therefore, in those circumstances, held that demand of service tax under Business Auxiliary Service could not be sustained. Income under the head airlines commission and airline incentives - HELD THAT - The Tribunal held that the same could not be considered as supply of Business Auxiliary Services, and therefore, set aside the demand in that regard. In view of the specific provisions of section 35L of the Excise Act, 1944, determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment would be a subject matter of appeal before the Hon ble Supreme Court - the appeal is disposed of as not maintainable before this Court.

Summary

Issues:
1. Jurisdiction of the High Court under section 83 of the Finance Act, 1994 read with section 35G of the Central Excise Act, 1944.
2. Interpretation of service tax liability under various heads like CHA service, Business Auxiliary Service, and penalty under section 78 of the Finance Act, 1994.

Jurisdiction of the High Court:
The appeal was filed under section 83 of the Finance Act, 1994 read with section 35G of the Central Excise Act, 1944, challenging the order passed by the Customs Excise and Service Tax Appellate Tribunal, Mumbai (CESTAT). The respondent contended that the appeal should have been filed before the Hon'ble Supreme Court under section 35L of the Excise Act, as it involved issues related to the rate of duty and taxability of services for assessment purposes. The High Court noted that certain questions, including taxability and excisability issues, fall under the jurisdiction of the Supreme Court as per section 35L of the Excise Act.

Interpretation of Service Tax Liability:
The Tribunal held that the revenue earned under Break Bulk Fee, Freight Rebate, Airline Commission, and Airline Incentive did not attract service tax liability under CHA service and Business Auxiliary Service. Regarding Break Bulk Fee, the Tribunal relied on a previous case to exclude it from service tax computation under CHA Services. For Freight Rebate, it was deemed not chargeable under Business Auxiliary Service as it was revenue from trading space in airline incentives for the appellant's own activities, not specific client bookings. The income from Airline Commission and Incentives was also excluded from Business Auxiliary Services taxation by the Tribunal. The Tribunal set aside the penalty under section 78 of the Finance Act, 1994.

Conclusion:
The High Court found that the appeal was not maintainable before it due to the jurisdictional issue falling under the purview of the Supreme Court as per section 35L of the Excise Act. The Court highlighted the specific provisions governing appeals related to the rate of duty and taxability, emphasizing that such matters should be addressed by the Supreme Court. Consequently, the appeal was disposed of as not maintainable before the High Court, leaving the Tribunal's decision on service tax liability under various heads unaltered.