TMI Blog2023 (11) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... of duty of excise or to the value of goods, or its classification, the appeal regarding same was only maintainable before the Hon ble Supreme Court under section 35 L of the Central Excise Act. The rationale behind same is to maintain uniformity in the rate of duty as well as classification of the items across the country. For the purposes of the Service Tax Act, same rationale is not applicable as the rate of duty is uniform and further there is no classification of services. The only classification of service is whether they fall under the negative list or not. In the present case there is no question concerning determination of any question having a relation to the rate of duty or to the value of goods. Rate of duty is fixed, there is also no dispute as to the value. Reliance placed in the case of COMMISSIONER OF CE AND CGST BHAVNAGAR VERSUS KRISHNA CONSTRUCTIONS [ 2023 (10) TMI 64 - GUJARAT HIGH COURT ] where it was held that Reading the question of law framed indicates that the issue under consideration is as to whether the assessee was eligible for exception / exemption under Notification No. 25 of 2012. The exemption if denied, would require adjudication on rate o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch person/entity is liable to pay service tax. Post the introduction of Negative list, the accounting code for purpose of classification of services was clarified by way of the circular of the No. 161/12/2012-ST, dated 06.07.2012, from F. No. 341/21/2012- TRU issued by the Central Board of Excise and Customs, Department of Revenue, Ministry of Finance, Government of India, on the above subject matter. For all taxable services, there was only one accounting code, as opposed to various accounting codes for different services in the positive list regime. 3.4 That, as per Section 66B of the Finance Act, 1994, with effect from 1/7/2012, the rate of the tax was uniform. Rate changed from year to year, but uniformly applicable for all services. 3.5 Hence, what transpires is that there was a uniformity in rate of tax, and all the services were to be classified as taxable or not. Services which came under negative list were not taxable, all the other services were taxable at uniform rate. 3.6 That, by virtue of section 83 of the Finance Act, 1994 all the appeal to the High Court from order of CESTAT were to be filed under Section 35G of the Central Excise Act, 1944. Section 35G of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , would require adjudication on rate of duty and therefore the appeal would fall under the caption 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 . Essentially even if it is the contention of the appellant that from the year 2012, a negative list of services was prescribed and therefore there is no classification of service left open, the case of Saumya Construction Pvt. Ltd. (supra) reads as under: 10. In the backdrop of the facts and contentions noted hereinabove, it would be necessary to first deal with the preliminary objection raised by the learned counsel for the respondent regarding non-maintainability of the appeal. For this purpose it would be necessary to decide as to whether the impugned order passed by the 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. 11. Before adverting to the rival contentions, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g a relation to the rate of duty of excise is part of the exclusionary clause in Section 35G(1). Reverting to Section 35L, we notice that clause (b) thereof provides for an appeal to the Supreme Court from any order passed by the Appellate Tribunal relating, among other things, to the determination of any question having a relation to the rate of duty of excise. This means that anything attendant to the determination of any question having a relation to the rate of duty of excise would also fall within the trappings of the exclusion, thus, taking the jurisdiction away from the High Court; to be agitated before the Supreme Court in terms of Section 35L. 5. Thinking a little deeper, if we were to understand the classification on jurisdiction to be that what would fall before the Apex Court are only appeals either as to the rate of duty or as to the value of goods for the purpose of assessment, we may immediately note that rate of tax is a prescription of the Parliament and it is not part of judicial function to tinker with the rate of tax. This has also been noticed in Karnataka State Beverages Corporation Ltd. (supra). Secondly and more importantly, if we were to find jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether any Service or not, whether the process if any undertaken in the service centre amounts to taxable service or not, and if the service rendered during that process are excisable goods or not, would fall within the meaning of the expression determination of the rate of duty of excise or the value of the goods for the purposes of assessment of duty used in Section 35G(1) and Section 35L(b) of the Act. Therefore, the phrase rate of tax does not mean fraction of tax payable 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, Sections 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 Sections 35G and 35L re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ween the Apex Court and the High Courts. All other matters other than what is set out above, which relates to the individual service providers and all disputes based on assessment orders which have attained finality, such as the benefits to which they are entitled to refunds, duty drawbacks, rebates, etc., which relate to a particular manufacture falls within the jurisdiction of the High Courts. In other words, all disputes emanating from the orders determining the rate 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. 16. The above decision of the Karnataka High Court has been followed by it in a subsequent decision in the case of Commissioner of Central Excise, Customs Service Tax v. Bellary Computers - 2014 (33) S.T.R. 504 (Kar.), and by the Allahabad High Court in the case of Royal Bank of Scotland N.V. v. Commissioner of Customs Central Excise, Noida - 2014 (35) S.T.R. 68 (All.). 17. Reference may now be made to the relevant statutory provisions. The Finance Act, 1994 does not provide for any mechanism for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment. 19. In view of the provisions of Section 35G of the Act, an appeal would lie before the High Court against every order passed in appeal by the Appellate Tribunal, provided 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. While applying the said provision to an order passed in relation to Service Tax under the Finance Act, 1994, what would be required to be examined is as to whether the order passed by the Tribunal relates to the determination of the rate of Service Tax or the value of any service for the purpose of assessment. 20. Therefore, the moot question that arises for consideration is as to whether the order passed by the Tribunal is an order relating to determination of the rate of Service Tax or the value of any service for the purpose of assessment. As can be seen on 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or valuation of any goods for the purposes of assessment of duty includes the determination of a question - (a) relating to the rate of duty of excise for the time being in force, whether under the Central Excise Tariff Act, 1985 (5 of 1986), or under any other Central Act providing for the levy and collection of any duty of excise, in relation to any goods on or after the 28th day of February, 1986; or (b) relating to the value of goods for the purposes of assessment of any duty of excise in cases where the assessment is made on or after the 28th day of February, 1986; or (c) whether any goods are excisable goods or whether the rate of duty of excise on any goods is nil; or (d) whether any goods fall under a particular heading or sub-heading of the First Schedule and the Second Schedule of the Central Excise Tariff Act, 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, grantin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal has committed a serious error in interpreting the definition of Real Estate Agent defined under Section 65(88) of the Finance Act, 1994 by not finding the respondent herein liable for discharge of Service Tax under the category of Real Estate Agent services for the amount received by them as development charges? The Tribunal, in the impugned order has held that the service rendered by the assessee does not get covered under the category of Real Estate Agent services. Evidently, therefore, the dispute involved in the present case relates to whether the activity carried out by the assessee is a service within the meaning of such expression as defined under the Finance Act, 1994; or whether such service falls under the category of taxable service under sub-section (105) of Section 65 of the Finance Act, 1994. Therefore, the controversy involved in the present case is a classification dispute which has a direct and proximate relation to the rate of Service Tax or the value of any service. Consequently, this court has no jurisdiction to adjudicate upon the said controversy. 14. Even the Karnataka High Court in the case of Scott Wilson (supra) held as under: What is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Income Tax Officer, Bangalore v. K.N. Guruswamy [1958 ITR Vol. 34 601] explaining the meaning the word assessment arising under the Income Tax Act has held as under : - Total income means the total amount of income, profits and gains computed in the manner laid down in the Act, and there are no good reasons why the word assessment occurring in the saving provisions should be restricted in the manner suggested so as to exclude proceedings for assessment of escaped income or under- assessed income .............. In its normal sense, to assess means to fix the amount of tax or to determine such amount . The process of re- assessment is to the same purpose and is included in the connotation of the term assessment . The reasons which led us to give a comprehensive meaning to the word assessment in section 13(1) of the Finance Act, 1950, operate equally with regard to the saving provisions under present consideration. 18. The Supreme Court in the case of C.A. Abraham v. Income-Tax Officer, Kottayam, and Another explaining the meaning of the word assessment in the context of the Income Tax Act held as under :- A review of the provisions of Chapter IV ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y or a dispute by some authority to whom it is submitted under a valid law for disposal. The expression order must have also a similar meaning, except that it need not operate to end the dispute. Determination or order must be judicial or quasi-judicial: purely administrative or executive direction is not contemplated to be made the subject-matter of appeal to this Court. The essence of the authority of this Court being judicial, this Court does not exercise administrative or executive powers i.e. character of the power conferred upon this Court original or appellate, by its constitution being judicial, the determination or order sought to be appealed from must have the character of a judicial adjudication. Meaning of Rate of Duty 20. It is in this background we have to interpret the words rate of duty . The question is, what is the meaning attached to the rate of duty as mentioned under these provisions. In order to understand the word rate of duty and the dispute relating to that, it is useful to refer to the meaning assigned to the said word by the Parliament by way of an explanation to sub- section (5) of Section 35G by amendment Act 29/1988. The said amendme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be enhanced or reduced by addition or reduction of the amounts in respect of such matters as are specifically provided under the Act. Though the determination of the word duty may not include all those questions, the explanation makes it clear the aforesaid expanded meaning is to be attributed to the aforesaid phrase for the purpose of this section only. It is because the said explanation is added to Section 35E which deals with the power of revision of Board or Commissioner of Central Excise in certain case. In other words what is sought to be conveyed by the explanation is that the authorities while exercising the revisional jurisdiction shall not go into those questions. That in no way comes in the way of understanding the meaning of the phrase rate of duty . On the contrary it clearly sets out the intention of the legislature in so far as the meaning to be attributed to the said phrase. Therefore, the said meaning could be read into the phrase wherever it is used in the other parts of the statute, as held by the Apex Court in Navin Chemicals case. It also would be in conformity with the interpretation placed on the said phrase by the Apex Court as well as the High Court, as i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sal Ferro and Allied Chemicals Ltd. reported in 2009 (234) E.L.T. 220 (Bom.) = 2009 (13) S.T.R. 498 (Bom.) at para 6 held as under : We have considered the rival contentions made on behalf of parties and also perused the provisions of Sections 35G and 35L(b) of the Act of 1944, an appeal against the order passed by the Appellate Tribunal would lie to the High Court except 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. Section 35L(b) provides that an appeal against an order passed by the Appellate Tribunal 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 would lie to the Supreme Court. It is, thus, clear from the aforesaid proviso that an appeal against an order passed by the Appellate Tribunal 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 would lie to the Supreme Court and not the High Court. 25. The Apex Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E in number of decisions. However, though not in an identical matter, but almost near to the said matter, interpreting the powers of the Appellate Tribunal, with reference to the jurisdiction of a special Bench and an ordinary Bench, the Supreme Court had an occasion to consider the very same words used in both the sections in the case of Navin Chemicals Mfg. . Trading Co. Ltd. v. Collector of Customs reported in 1993 (68) E.L.T. 3 (S.C.) under the Customs Act. The Apex Court held as under : The controversy, therefore, relates to the meaning to be given to the expression determination of any question having a relation to the rate of duty of customs or to the value of the goods for purposes of assessment . It seems to us that the key lies in the words for the purpose of assessment therein. Where the appeal involves the determination of any question that has a relation to the rate of customs duty for the purposes of assessment that appeal must be head by a Special Bench. Similarly, where the appeal involves the determination of any question that has a relation to the value of goods for the purposes of assessment that appeal must be heard by a Special Bench. Cases that relate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that relates directly and proximately to the value of goods for purposes of assessment The statutory definition of the said expression indicates that it has to be read to limit his application to cases where for the purposes of assessment, questions arise directly and proximately as to the rate of duty or the value of the goods. At para 12 they concluded as under : This, then, is the test for the purposes of determining whether or not an appeal should be heard by a Special Bench of CEGAT, whether or not a reference by CEGAT lies to the High Court and whether or not an appeal lies directly to the Supreme Court from a decision of CEGAT: does the question requires determination have a direct and proximate relation, for the purposes of assessment, to the rate of duty applicable to the goods or to the value of the goods. 28. In the case of Commissioner of Customs, Chennai v. Jayathi Krishna and Company reported in 2000 (119) E.L.T. 4 (S.C.), the question involved was whether the assessee is liable to pay interest under Section 61(2) of the Customs Act. When the imposition of interest under the aforesaid provision was challenged before the Tribunal, the Tribunal held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there is violation of Exim Policy. In an appeal preferred against the order of the Tribunal under Section 130E of the Act, the Supreme Court reversed the finding of the Tribunal by holding that assessee is guilty of violating Para 156(A) of the Exim Policy 1992-97 and therefore, they are liable to be assessed under Tariff Heading 64.04 and accordingly, they were liable to pay duty of customs at 50% + CVD at 15% ad valorem and the assessee was not entitled to concessional rate of duty under Notification No. 45/94-Cus., dated 1-3-1994 and the department was right in invoking Rule 8 of the Customs Valuation Rules. 33. In Commissioner of Customs, Tuticorn v. Edhayam Frozen Foods, reported in 2008 (230) E.L.T. 225 (Mad.), objection was taken regarding the maintainability of the appeal before the High Court under Section 130 of the Customs Act. It was held that the determination of question involved in this case does not have a relation to the rate of duty or the value of the goods for the purpose of assessment and therefore, the appeal was maintainable. The question involved therein was whether Prawn/Shrimp is also fish and liable to export cess under Agricultural Produce Cess A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provide by law for a uniform and equal rate of taxation and assessment, applies to the percentage of fixation, as used in connection with taxation and to the valuation of the property, as used in connection with assessment . It is a valuation of every man s estate or setting down how every one shall pay, or be charged with, to any tax. By the use of the expression rate a relation between the taxable income and the tax charged is intended, but the relation need not be of the nature of proportion of fraction. The Explanation to sub-section (5) of Section 35E of the Central Excise Act, the expression includes the determination of a question relating to the rate of duty, to the value of Service for the purposes of assessment; to the classification of Service under the Tariff and whether or not they are covered by an exemption notification: and whether the value of Service for the purposes of assessment should be enhanced or reduced having regard to certain matters that the said Act provides for. Questions relating to the rate of duty and to the value of Service for purposes of assessment are questions that squarely fall within the meaning of the said expression. A dispute as to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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