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TMI Blog2014 (9) TMI 1058X X X X Extracts X X X X X X X X Extracts X X X X ..... t? (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 case, to consider the following question : (i) Whether the Hon'ble CESTAT Bench, Ahmedabad has erred in holding that for the purpose of levy of Service Tax, the Respondent and L&T-EPC unit as a single legal entity in the fact and circumstances of the case, and hence Respondent is not liable to pay Service Tax?" 2. As is apparent on a plain reading of the questions, the first question relates to the maintainability of the appeals and as such, is required to be decided as a preliminary issue. For the purpose of deciding the preliminary issue, it would be necessary to notice some basic facts relating to the nature of the case before the Tribunal. 3. The respondent - M/s Larsen & Toubro Limited is engaged in the execution of lumpsum turnkey contracts for setting up plants and other facilities and providing services of design and engineering, procurement, project management and project supervision, information technology and information technology enabled service. The respondent set up two units for providing engineering and design s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of assessment, an appeal would lie to the Supreme Court and not to the High Court. The attention of the court was invited to the provisions of section 35E of the Central Excise Act, 1944, and more particularly to clause (c) of the Explanation thereto, to submit that the present case falls within the ambit of the said clause, viz., "whether any goods are excisable goods or whether the rate of duty of excise on any goods is nil". In other words, as to whether the service rendered by the respondent is a taxable service or whether the rate of service tax on such services is nil. Under the circumstances, the order passed by the Tribunal on the question of determination of the nature of services rendered by the respondent and the taxability of the same, having a direct relation to the rate of service tax or value of such services for the purpose of assessment, the appeal would lie before the Supreme Court and this court has no jurisdiction to decide the appeal. Referring to sub-section (105) of section 65 of the Finance Act, 1994, it was submitted that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of this court and appeals would lie before the Supreme Court and not before this court. 5.2 Reliance was also placed upon the decision of the Delhi High Court in the case of Commissioner of Service Tax v. Delhi Gymkhana Club Ltd., 2009 (16) STR 129 (Del.) for the proposition that where the order passed by the Appellate Tribunal relates to the determination of any question having a relation to the rate of duty of excise or value of goods for the purpose of assessment, the aggrieved party has to approach the Supreme Court directly by filing appeal under section 35L of the Central Excise Act, 1944. The court on facts found that the order of the Appellate Tribunal, in essence, related to determination of the rate of duty. The court observed that whether nomenclature thereof is given as service tax, it is the rate of duty of that tax which would essentially fall for consideration. Hence, appeal preferred against such decision would not be maintainable under section 35G of the Act and the remedy was to file appeal under section 35L of the Act, which lies to the Supreme Court. 5.2 Reliance was placed upon the decision of the Supreme Court in the case of Navin Chemicals Mfg. & Trading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eking remedy are excluded. It was further held that the Excise law is a complete code in order to seek redress in excise matters and hence, may not be appropriate for the writ court to entertain a petition under Article 226 of the Constitution of India. In the facts of the said case, the question before the Tribunal was regarding determination of the assessable value of the commodity in question for the purpose of levy of duty under the Act, which according to the Supreme Court, ought to have been carried by the assessee by way of appeal before it under section 35L of the Central Excise Act, 1944. 5.5 It was, accordingly, urged that the impugned order of the Tribunal being related to the determination of a question having relation to the rate of service tax or the value of services, this court has no jurisdiction to adjudicate upon the same and the appeals are not maintainable and deserve to be dismissed as such. 6. Opposing the appeals, Mr. Y. N. Ravani, learned senior standing counsel appearing on behalf of the appellant submitted that the present dispute does not relate to the rate of duty or to the value of any services and as such, the preliminary issue raised to the maintai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the facts of the said case and would not be applicable to the facts of the present case. It was submitted that ultimately, the determination of tax would involve many inter-connected issues which are integral. If the ultimate liability depends upon any issue, it is a direct and proximate issue and that all issues involved in the present case are integrally connected and hence, there is a direct and proximate relation to the rate of service tax or the value of taxable service. Under the circumstances, the appeals would not lie before this court and are required to be dismissed on this ground alone. 8. In the backdrop of the facts and contentions noted hereinabove, it would be necessary to first deal with the preliminary issue regarding non-maintainability of the appeals. For this purpose it would be necessary to decide as to whether the impugned order passed by the Appellate Tribunal is 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, so as to bar the jurisdiction of the High Court to adjudicate upon the issue. 9. Before adverting to the rival c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omaly and substantial confusion. All assessments necessarily have to determine and decide the rate of tax after determining and deciding whether or not activity is chargeable or tax can be levied. Assessments against the assessee would decide the rate of tax applicable once it is held that the activity is chargeable to tax under the F. Act. The words 'rate of tax' in relation to rate of tax would include the question whether or not the activity is exigible to tax under a particular or specific provision. This will be a reasonable and appropriate interpretation and will not cause or result in confusion or ambiguity regarding the appellate forum. Line between exigibility and rate of tax as propounded can be rather thin and superfluous in the present statutory context." 12. In Union of India v. Guwahati Carbon Ltd., (supra), the Supreme Court 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 red ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... :- (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"." The court held that against an order passed by the Appellate Tribunal relating to the determination of any question having relation to the rate of service taxes or to the value of service for the purposes of assessment appeal lies to the Supreme Court under section 35L(b) of the Act and not to the High Court under section 35G of the Act. The court further observed as follows: "38. The intention behind this bifurcation of jurisdiction between the Apex Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1994. For the purpose of appreciating the controversy in issue, it would be germane to refer to the provisions of section 35G and section 35L of the Central Excise Act, 1944, which to the extent the same are relevant for the present purpose read as under: "35G. Appeal to the High Court. - (1) 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 (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 the purposes of assessment), if the High Court is satisfied that the case involves a substantial question of law. [2] xxx [3] xxx [4] xxx [5] xxx" "35L. Appeal to the Supreme Court. - An appeal shall lie to the Supreme Court from - (a) any judgement of the High Court delivered - (i) in an appeal made under section 35G; or (ii) on a reference made under section 35G by the Appellate Tribunal before the 1st day of July, 2003; (iii) on a reference made under section 35H, I in any case which, on its own motion or on an oral application made by or on behalf of the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for the purpose of satisfying itself as to the legality or propriety of any such decision or order and may, by order, direct such Commissioner or any other Commissioner to apply to the Appellate Tribunal or, as the case may be, the Customs and Excise Revenue's Appellate Tribunal established under section 3 of the Customs and Excise Revenue Appellate Tribunal Act, 1986 (62 of 1986) for the determination of such points arising out of the decision or order as may be specified by the Committee of Chief Commissioners of Central Excise in its order. (III) The Commissioner of Central Excise may, of his own motion, call for and examine the record of any proceeding in which an adjudicating authority subordinate to him has passed any decision or order under this Act for the purpose of satisfying himself as to the legality or propriety of any such decision or order and may, by order, direct (such authority or any Central Excise Officer subordinate to him) to apply to the Commissioner (Appeals) for the determination of such points arising out of the decision or order as may be specified by the Commissioner of Central Excise in his order. (IV)xxxxx. (V) xxxxxx. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is nil; or whether any goods fall under a particular heading or sub-heading of the schedules to the Central excise Tariff Act, 1985 etc.; or whether 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 whether the value of any goods for the purposes of assessment of duty of excise shall be enhanced or reduced. Insofar as the applicability of service tax is concerned, the rate of determination of duty in terms of the above provisions can be stated to be relating to the rate of service tax for the time being in force relating to the value of any service for the purpose of assessment of service tax; whether the activity is a service within the meaning of such expression as defined under the Finance Act, 1994; or whether the rate of service tax in respect of any service is nil or whether any service falls under the category of taxable service under sub-section (105) of section 65 of the Finance Act, 1994; or whether any service is or is not covered by a particular notification or order issued by the Central Government or the Board, as the case may be, grant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arily to be legal persons. The Tribunal, upon appreciation of the evidence on record was of the view that in terms of the definition of person as defined under section 2(5) of the SEZ Act, it cannot be said that the units in SEZ and DTA units can be considered as separate persons. The Tribunal has then addressed the issue as to whether the definition of person considered with rule 19(7) of the SEZ Rules would require it to consider the SEZ unit as a separate legal entity and for the reasons recorded in the order has found that SEZ unit and DTA unit of L&T unit cannot be considered as separate legal entities. In the light of the above finding recorded by it, the Tribunal has held that service tax levy is not attracted on the services rendered by SEZ units to DTA units of L & T unit. 21. Thus, the entire basis for setting aside the order passed by the adjudicating authority was that the SEZ unit and DTA unit of L & T unit cannot be considered as separate legal entities. Since for the levy of service tax, the presence of two persons, viz. the service provider and the service receiver is necessary, the Tribunal has set aside the levy of service tax. The controversy in issue, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X
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