2025 (5) TMI 1834 - HC - Service Tax

Maintainability of appeal - appropriate forum - remedy lies under Section 35G of the Central Excise Act 1944 read with Section 83 of the Finance Act 1994 before the High Court Or exclusively before the Supreme Court under Section 35L of the Central Excise Act 1944 - Taxability of services - construction of institutions engaged in education - HELD THAT - Ld. Counsel for the Respondent raises a question relating to the maintainability of the present appeal in view of Section 35G and 35L of the Central Excise Act 1944 which applies in respect of service tax cases as well. This Court had an occasion to consider a similar matter in Commissioner of CGST and Central Excise Delhi South v. M/s Spicejet Ltd. 2024 (12) TMI 1408 - DELHI HIGH COURT . Thus the present appeal would not be maintainable before this Court. Accordingly the appeal is dismissed with liberty to the Appellant to approach the Hon ble Supreme Court.

Summary

Issues Presented and Considered

The core legal questions considered in this judgment are:

1. Whether the construction services provided to educational institutions are liable to service tax under the applicable tax laws.

2. Whether the present appeal filed under Section 35G of the Central Excise Act, 1944, read with Section 83 of the Finance Act, 1994, is maintainable before the High Court, or whether the remedy lies exclusively before the Supreme Court under Section 35L of the Central Excise Act, 1944.

Issue-wise Detailed Analysis

Issue 1: Taxability of Construction Services for Educational Institutions

The adjudicating authority in the Order-in-Original (O-I-O) dated 21st July 2015 held that construction services rendered to educational institutions are not liable to service tax. The authority confirmed a nominal demand of Rs. 22,661/- related only to Goods Transport Agency Services and imposed interest accordingly. The appellant department challenged this finding, contending that construction services to educational institutions should be taxable.

However, the Customs Excise and Service Tax Appellate Tribunal (CESTAT) upheld the Order-in-Original, confirming that construction services to educational institutions do not attract service tax. The Court did not delve into a detailed analysis of this issue in the present appeal, as the focus shifted to the maintainability of the appeal itself.

Issue 2: Maintainability of the Present Appeal before the High Court

The appellant filed the present appeal under Section 35G of the Central Excise Act, 1944, challenging the CESTAT order. The respondent raised a preliminary objection regarding the maintainability of the appeal before the High Court, citing Sections 35G and 35L of the Central Excise Act, which govern appellate jurisdiction in service tax matters.

The Court extensively considered precedents and the statutory framework to determine whether the High Court has jurisdiction to entertain the appeal or whether the remedy lies exclusively before the Supreme Court.

Relevant Legal Framework and Precedents:

• Section 35G of the Central Excise Act, 1944, provides for appeals from orders passed by the Commissioner (Appeals) or the Tribunal to the High Court.
• Section 35L of the Central Excise Act, 1944, provides that appeals from orders passed by the Tribunal lie to the Supreme Court.
• Finance Act, 1994, and related service tax provisions are also applicable.
• Past decisions considered include:
  • Commissioner of Service Tax v. Ernst & Young Pvt. Ltd.
  • Commissioner of Service Tax v. Delhi Gymkhana Club Ltd.
  • Commissioner of Service Tax, Delhi v. Bharti Airtel Ltd.
  • Commissioner of Service Tax v. Intertoll ICS CE Cons O & M Pvt. Ltd.

Court's Interpretation and Reasoning:

The Court referred to its earlier decision in a similar matter where it had analyzed the issue of limitation and appellate jurisdiction. It observed that the nature of the order appealed against is crucial in determining maintainability. The original order involved questions on CENVAT credit, penalty imposition, and service tax leviability, which fall within the Tribunal's jurisdiction.

It was noted that although the CESTAT had only considered the issue of limitation in that case, the appeal could not be entertained before the High Court because the statutory scheme directs appeals against Tribunal orders to the Supreme Court under Section 35L.

Applying this reasoning, the Court held that the present appeal against the CESTAT order is not maintainable before the High Court. Instead, the appellant must approach the Supreme Court as per the statutory provisions.

Key Evidence and Findings:

The Court relied on the impugned CESTAT order confirming the O-I-O and the statutory provisions governing appellate jurisdiction. The absence of any respondent appearance or counter-arguments was noted but did not affect the jurisdictional determination.

Application of Law to Facts:

The Court applied the statutory appellate scheme and relevant precedents to the facts of the present appeal. Since the appeal is against a CESTAT order, Section 35L mandates that the remedy lies before the Supreme Court. The High Court does not have jurisdiction to entertain the appeal under Section 35G in this context.

Treatment of Competing Arguments:

The appellant's argument for maintainability under Section 35G was considered but rejected based on the statutory scheme and binding precedents. The Court also addressed the appellant's liberty to seek remedies under the Limitation Act, 1963, preserving their right to approach the Supreme Court.

Conclusions:

The Court concluded that the appeal filed under Section 35G challenging the CESTAT order is not maintainable before the High Court. The appellant is at liberty to approach the Supreme Court under Section 35L of the Central Excise Act, 1944.

Significant Holdings

"Therefore, the present appeal is dismissed as not maintainable."

"In view of the above decisions and considering the nature of the issues that have been decided... this Court is of the opinion that an appeal against the said impugned order would lie, in terms of Section 35L of the Central Excise Act, 1944, to the Hon'ble Supreme Court."

"The dismissal of the present appeal would not preclude the Appellant from availing such remedies as may be available in accordance with law and seeking benefit under Section 14 of the Limitation Act, 1963, for the period during which the present appeal was pending before this Court."

Core Principles Established:

• Construction services provided to educational institutions are not liable to service tax under the facts of the case.
• Appeals against orders passed by the Customs Excise and Service Tax Appellate Tribunal in service tax matters lie exclusively before the Supreme Court under Section 35L of the Central Excise Act, 1944.
• The High Court does not have jurisdiction to entertain appeals under Section 35G against CESTAT orders in service tax cases.
• Parties retain the right to seek remedies under the Limitation Act and approach the Supreme Court accordingly.

Final Determinations on Each Issue:

1. The construction of educational institutions is not subject to service tax as per the adjudicating authority and CESTAT findings.

2. The present appeal challenging the CESTAT order is dismissed as not maintainable before the High Court, with liberty to approach the Supreme Court.