2023 (7) TMI 109 - HC - Service Tax

Appropriate forum of appeal - HC or SC - Taxability of service - Collection Agency Services in relation to Securitization deals originated prior to February, 2006 or not - invocation of Section 73(4) is instead of 73(1) of the Finance Act, 1994, mistakenly - Liquidity Facility is in breach of the exemption afforded to interest - HELD THAT - From the perusal of Section 83 of the Finance Act, 1944, it is clear that Section 35G and Section 35L of the Central Excise Act, 1944 are made applicable in relation to service tax, as they apply to the rate of excise duty. Section 35G provides for Appeal to High Court. Sub-section (1) thereof clearly provides that an appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on or after the 1st day of July, 2003, however, not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment, if the High Court is satisfied that the case involves a substantial question of law - there is clear exclusion in regard to appealability of an order not being an order relating to the determination of any question having a relation to the rate of duty of excise or to the value of goods for the purpose of assessment. On a cumulative reading of the provisions of Section 83 of the Finance Act, 1944 read with the provisions of Section 35G and 35L of the CE Act, it is opined that necessarily the law itself provides that an appeal would lie to the Supreme Court from an order passed by the Appellate Tribunal. The question which arises for determination is one having a relation to the rate of duty of excise or to the value of goods for purposes of assessment. The remedy for the appellant in terms of what has been provided for under section 35G(1) read with Section 35L(1)(b) would be to approach the Supreme Court by filing an appeal - appeal disposed off.

Summary

Issues involved:
The appeal filed by the revenue under section 35G of the Central Excise Act, 1944 arising from the order dated 14 January, 2020 passed by the Customs, Excise and Service Tax Appellate Tribunal, Mumbai. The substantial questions of law for determination in the present proceedings are related to Collection Agency Services, imposition of detriment, taxing consideration earned from Liquidity Facility, and the beneficiary of the facility.

Collection Agency Services:
The appellant questioned the Tribunal's decision regarding the rendering of Collection Agency Services in relation to Securitization deals originated prior to February, 2006. The Tribunal's ruling was challenged by the appellant, raising the issue of whether the Tribunal was correct in its holding.

Imposition of Detriment:
Another issue raised was the imposition of detriment without authority of law due to a typing mistake invoking Section 73(4) instead of 73(1) of the Finance Act, 1994. The Tribunal's decision was challenged by the appellant, questioning the correctness of the imposition in such circumstances.

Taxing Consideration from Liquidity Facility:
The Tribunal's decision regarding the taxing consideration earned from Liquidity Facility was also contested. The appellant raised the issue of whether the Tribunal was correct in holding that taxing consideration earned from Liquidity Facility is in breach of the exemption afforded to interest.

Beneficiary of the Facility:
The appellant disputed the Tribunal's ruling that the beneficiary of the facility is not the "Special Purpose Vehicle" but the assessee/respondent themselves. The issue raised was whether there was no service rendered to another person based on the beneficiary of the facility.

Judgment:
The High Court, in its judgment, addressed the maintainability of the appeal before the Court based on the provisions of Section 83 of the Finance Act, 1944 read with Section 35G of the Central Excise Act, 1944. The Court analyzed the applicability of Section 35G and Section 35L in relation to service tax and determined that the appeal should lie to the Supreme Court from an order passed by the Appellate Tribunal concerning the rate of duty of excise or the value of goods for purposes of assessment.

Conclusion:
The Court concluded that the issue in the present appeal was related to taxability and valuation, and the remedy for the appellant was to approach the Supreme Court by filing an appeal. Therefore, the Court disposed of the appeal, permitting the appellant to file an appeal before the Supreme Court, with all contentions of the parties expressly kept open.