Revenue's Appeal Against CESTAT's Service Taxability Ruling Lies Before Supreme Court: Delhi High Court

The Delhi High Court has held that an appeal against a CESTAT order determining the taxability of a particular service is not maintainable before the High Court and must instead be filed before the Supreme Court under Section 35L of the Central Excise Act, 1944.

A Division Bench of Justices Anil Kshetarpal and Shail Jain relied on Commissioner of CGST and Central Excise, Delhi South v. M/s Spicejet Ltd., SERTA 2/2024 to conclude,

“where the CESTAT determines the taxability of a particular service, an appeal against such determination would lie before the Hon'ble Supreme Court under Section 35L of the Central Excise Act, 1944.”, the court ruled.

Revenue had challenged the CESTAT's December 22, 2023 order, which had allowed the assessee's appeal and dismissed the Department's cross-appeal.

Among other findings, the Tribunal had set aside the service tax demand on "site formation service", holding that the case was covered by the Tribunal's earlier decision in ASSOTECH Limited vs. Commissioner of Central Excise & Service Tax, Meerut-I, affirmed by the Supreme Court.

CESTAT had also upheld the Commissioner's decision dropping service tax demands under other heads, including commercial or industrial construction service, construction of complex service, and a demand based on an income tax survey declaration.

Before the High Court, the respondent raised a preliminary objection to the maintainability of the appeal, contending that questions relating to the taxability of a service fall within the ambit of Section 35L of the Central Excise Act and are directly appealable to the Supreme Court.

Revenue however relied on an Allahabad High Court decision in NKG Infrastructure Ltd. v. Commissioner of Customs, Central Excise & Service Tax (2017) to argue that such appeals were maintainable before the High Court.

The High Court distinguished the Allahabad High Court's ruling in NKG Infrastructure Ltd., observing that the question of maintainability had neither been raised nor considered in that case.

It further held that the Revenue had failed to show that M/s Spicejet Ltd (supra) overlooked any statutory provision or binding precedent warranting a different view.

As such, the Court disposed of the matter while granting liberty to the Revenue to pursue remedy before the Supreme Court.

For Petitioner: Advocates Shubham Tyagi (SSC, CBIC), Navruti Ojha

For Respondent: Advocates Prabhat Kumar, Ekta Kumari, Ritika Verma, Samarth, R P Singh, Rakesh Kumar