TMI Blog2014 (9) TMI 1058X X X X Extracts X X X X X X X X Extracts X X X X ..... 1944. - TAX APPEAL NO. 42 of 2013 With TAX APPEAL NO. 43 of 2013 - - - Dated:- 25-9-2014 - MS. HARSHA DEVANI AND MS SONIA GOKANI, JJ MR YN RAVANI, ADVOCATE for the Appellant(s) No. 1 MR NITIN K MEHTA, ADVOCATE for the Opponent(s) No. 1 ORDER (PER : HONOURABLE MS.JUSTICE HARSHA DEVANI) 1. Both these appeals under section 35G of the Central Excise Act, 1944 (hereinafter referred to as the Act ), challenging the order dated 07.11.2012 passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, Ahmedabad (hereinafter referred to as the Tribunal ) in Appeal No. ST/329/11 and Appeal No.ST/330/11, have been admitted vide separate orders dated 24th July, 2014 on the following substantial questions of law: (I) Whether, against the impugned judgement and order passed by the Customs, Excise Service Tax Appellate Tribunal, present appeal before this Court would be maintainable or not and/or whether the appeal would lie before the Hon ble Supreme Court as provided under section 35(L) of the Act? (II) If the Question No.(I) is answered in affirmative and it is held that the appeal would be maintainable before this Court, in that c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f L T Ltd. cannot be considered to be legal entities. The revenue has called in question the above order of the Tribunal, on the ground the Tribunal has erred in holding that for the purpose of levy of Service Tax, the respondent and L T-EPC unit are a single legal entity and the respondent is, therefore, not liable to pay Service Tax. 5. Mr. P. K. Sahu, learned counsel with Mr. Nitin Mehta, learned advocate for the respondent submitted that the first question formulated by the court does not arise out of the impugned order and is in the nature of a preliminary objection raised by the respondent assessee against the maintainability of the appeals. Reference was made to the provisions of sections 35G and 35L of the Act, to point out that against an order passed in appeal by the Appellate Tribunal, an appeal shall lie to the High Court if such order is not 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 the purposes of assessment and where an order relates to the determination of any question having a relation to the rate of duty of excise or value of goods for the purposes o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act: (a) Dispute relating to the service tax payable on any service/taxable service. (b) The value of the taxable service for the purposes of assessment. (c) A dispute as to the classification of services. (d) Whether those services are covered by an exemption notification or not? (e) Whether the value of services for the purposes of assessment is required to be increased or decreased? (f) The question of whether any services are taxable services or not? (g) Whether an activity is a service rendering activity or not, so as to attract levy of service tax? (h) Whether a particular service falls within which heading, sub-heading of section 65(105) of the Service Act, 1994 which defines taxable Service . It was submitted that the present case would fall within the ambit of clause (g) above, namely, whether the activity carried out by the respondent is a service rendering activity or not, so as to attract levy of service tax. Under the circumstances, the controversy involved in the present cases is beyond the jurisdiction of this court and appeals would lie before the Supreme Court and not before this court. 5.2 Reliance was also plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se Act. 5.3Reliance was also placed upon the decision of this court in the case of Commissioner of Central Excise and Customs v. Swiss Glass Coat Equipments Ltd., 2011 (273) E.L.T. 364 (Guj.) wherein the court had agreed with the view adopted by the Andhra Pradesh High Court in Commissioner of Central Excise, Hyderabad v. Shriram Refrigeration Industries, 2009 (240) E.L.T. 201 (A.P.) and had held that the appeal which raised a question as to whether re-glass lining of old vessels amounts to manufacture or not, involves determination of a question relating to the rate of duty of excise or value of goods for the purpose of assessment, would lie before the Supreme Court and not before this court. 5.4 The decision of the Supreme Court in Union of India v. Guwahati Carbon Ltd., 2012 (278) E.L.T. 26 (S.C.) was cited wherein it has been held that when a revenue statute provides for a person aggrieved by an assessment thereunder, a particular remedy in a particular forum, in a particular way, it must be sought in that forum in that manner and all other forums and modes of seeking remedy are excluded. It was further held that the Excise law is a complete code in order to seek redress ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ispute as regards classification is required to be adjudicated. Under the circumstances, the appeals would lie before this court and not before the Supreme Court, as is sought to be contended on behalf of the respondent. 7. In rejoinder, Mr. P. K. Sahu, learned counsel for the respondent submitted that the issue involved in the case of Ruchi Soya Industries Ltd. v. Union of India (supra) was a factual one regarding the total carotenoid content in Crude Palm Oil, and it was an admitted position that if the total carotenoid oil (as beta carotene) is found to be in the range of 500-2500 mg/kg in the very Palm Oil it attracted concessional rate of basic customs duty of 65% and if the said requirement was not met, the Crude Palm Oil would be classified under Heading 151190.90 of the Customs Tariff Act attracting higher rate of customs duty of 75%. It is in these circumstances, that the court had held that no question arose in relation to rate of duty of customs or to the value of the goods for the purpose of assessment. According to the learned counsel, the above decision was rendered in the facts of the said case and would not be applicable to the facts of the present case. It was s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x or the valuation of the services chargeable to tax. The words are not broad or wide enough to encompass the question, whether or not the activity is a taxable service under the charging section. It was highlighted that unlike the Central Excise Act, rate of Service Tax is uniform and constant. Thus, there cannot be a dispute as to rate of tax when the question only relates to exigibility or levy of tax. The court held thus: 18. Xxxxx. Determination of any question relating to rate of tax would necessarily directly and proximately involve the question, whether activity falls within the charging section and Service Tax is leviable on the said activity. The said determination is integral and an important injunct to the question of rate of tax. In case Service Tax is not to be levied or imposed and cannot be imposed under the charging section, no tax would be payable. The said determination would be direct or proximate to the issue of rate of tax, which will include nil tax, when no tax is chargeable. 19. If the reasoning given by the Revenue is to be accepted, it will lead to anomaly and substantial confusion. All assessments necessarily have to determine and decide the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le because what is the tax payable i.e., fraction payable is decided by the legislature. Once that is prescribed by the legislature in the Act, the Court cannot sit in judgment and alter or modify the said rate of tax. The Court has no jurisdiction to go into the correctness or otherwise of the rate of tax payable in the sense that the rate prescribed by the legislature. In the case of Finance Act, 1994, the rate of service tax payable is uniform to all the services. If the rate of tax is to be understood in the sense it is suggested, section 35G and 35L, has no application at all to the Finance Act. Such an interpretation would render Section 83 in so far as applying the provisions of Section 35G and 35L redundant. Then there is no provision in the Finance Act, 1994 for determination of the aforesaid disputes. That was not the intendment of the Parliament. Therefore, the argument that rate of tax means only the rate at which tax is payable or a fraction is unsustainable. 36. Broadly, the following disputes do not fall within the jurisdiction of the High Court under section 35G of the Act:- (a) Dispute relating to the service tax payable on any service/taxable service. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of service tax and value of service, which has reached finality are to be determined by the High Court and not disputes arising prior to the stage of determining the rate of service tax and value of service. 14. Reference may now be made to the relevant statutory provisions. The Finance Act, 1994 does not provide for any mechanism for appeal against an order made by the Appellate Tribunal under section 86 thereof. However, section 83 thereof provides for the application of certain provisions of the Central Excise Act, 1944 and reads thus: 83. Application of certain provisions of Act 1 of 1944 : The provisions of the following sections of the Central Excise and Salt Act, 1944 as in force from time to time, shall apply, so far as may be in relation to service tax as they apply in relation to duty of excise. 15. It is in the light of the provisions of section 83 of the Finance Act, 1994 that an appeal lies to the High Court under section 35G and to the Supreme Court under section 35L of the Central Excise Act, 1944 against any order passed by the Appellate Tribunal under section 86 of the Finance Act, 1994. For the purpose of appreciating the controversy in issue, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the rate of service tax or the value of any service for the purpose of assessment. As can be seen from a combined reading of section 35G and section 35L of the Act, if the order of the Tribunal relates to determination of the rate of duty, the appeal would lie before the Supreme Court and not before the High Court. The expression rate of duty has not been defined under the Act. However, for the purpose of considering the meaning assigned to the said expression, the Supreme Court in the case of Navin Chemicals Mfg. Trading Co. Ltd. v. Collector of Customs, 1993 (68) ELT 3 (SC), has looked into the Explanation under section 35E of the Central Excise Act which deals with the powers of the Board or Commissioner of Central Excise to pass certain orders. Section 35E of the Act, insofar as the same is relevant for the present purpose, reads thus: 35E. Powers of Board of Commissioner of Central Excise to pass certain orders - (1) The Board may, of its own motion, call for and examine the record of any proceeding in which a Commissioner of Central Excise as an adjudicating authority has passed any decision or order under this Act for the purpose of satisfying itself as to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1985 (5 of 1986), or the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), or the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978), or that any goods are or not covered by a particular notification or order issued by the Central Government or the Board, as the case may be, granting total or partial exemption from duty; or (e) whether the value of any goods for the purposes of assessment of duty of excise shall be enhanced or reduced by the addition or reduction of the amounts in respect of such matters as are specifically provided in this Act. 18. On a plain reading of the above provision, the intention of the legislature as regards the expression determination of the rate of duty or value of goods is clear, viz., it includes the determination of a question relating to the rate of duty of excise under the Central Excise Tariff Act or any other Central Act providing for levy and collection of duty, relating to the value of goods for the purpose of assessment of any duty of excise; whether any goods are excisable goods or whether the rate of duty of excise on any goods is nil; or whether any goods fall unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service tax or the value of any service. It would, therefore, be necessary to refer to the nature of the controversy involved in the present case. 20. The respondent M/s Larsen Toubro Limited set up two units for providing engineering and design service, project management services and services of back office operations. Both the units are located in the Special Economic Zone (SEZ). The SEZ units also carry out work in-house for the units located in Domestic Tariff Area (DTA) of L T Ltd. The revenue authorities sought to levy service tax on SEZ units on the ground that the units located in SEZ and the DTA units of L T Ltd. are separate legal entities and the services provided by SEZ units to DTA units are taxable services. A show cause notice issued in this regard, culminated into an order-in- original dated 14.02.2011, confirming demand of service tax along with interest at the rate provided under section 75 and penalties under section 77(1), section 77(2) and section 78 of the Finance Act, 1994. The Tribunal, in the impugned order has held that in case of service tax levy, presence of two persons is a must and these persons have necessarily to be legal persons. The Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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