Appeal On Taxability Including Point Of Limitation Doesn't Lie Before HC U/S 35G Of Central Excise Act: Delhi High Court

The Delhi High Court has reiterated that an appeal from CESTAT under the Central Excise Act 1944 involving the issue of taxability will lie before the Supreme Court under Section 35L.A division bench of Justices Prathiba M. Singh and Rajneesh Kumar Gupta ruled that such an appeal, even on a limited point of limitation, will not lie before the High Court under Section 35G. It observed,“Even if the question of limitation has been raised, the Court has to go into the merits of the matter after a decision on the question of limitation is made. The maintainability of the appeal would have to be examined on the said benchmark…The obvious conclusion would be that if this Court holds that the SCN was within the limitation, the issue of taxability would have to be gone into.”In the case at hand, the Department had preferred an appeal under Section 35G against a CESTAT order setting aside demand for recovery of service tax to the tune of Rs.3,13,01,189/- from the Respondent, an Internet Service Provider.CESTAT had ruled in Respondent's favour on the ground that the Show Cause Notice issued to it by the Department was barred by limitation.Respondent moved an application, contesting the maintainability of the Department's appeal on the ground that issue of taxability (i.e. whether Respondent is entitled to exemption from service tax under a 2004 Notification) would arise in this matter and, therefore, the appeal would lie under Section 35L to the Supreme Court.The Department however contended that the CESTAT had merely adjudicated the question of limitation and had not gone into the merits, thus the appeal against the impugned order would lie before the High Court.Disagreeing with the Department, the High Court referred to Commissioner of CGST and Central Excise Delhi South v. M/s Spicejet Ltd. (2024) whereby the High Court had held that even if the impugned order has dealt only with the issue of limitation, the appeal would lie to the Supreme Court alone.The High Court had reasoned that the expression used “determination of any question in relation to rate of duty or value for the purpose of assessment” used in Section 35L gives a broad expanse to the appellate jurisdiction of the Supreme Court in respect of question relating to rate of tax or value for the purpose of assessment. It was also held that if the impugned order relates to several issues but when one of the questions raised relates to rate of tax or valuation, the appeal is maintainable before the Supreme Court and no appeal lies before the High Court under Section 35G.In light of the above the High Court rejected the appeal as non-maintainable, stating,“The mere fact that the appellant is only aggrieved by the decision on the point of limitation would not make an appeal from the impugned order maintainable before this Court because it is not the issues raised in the appeal which are material but the nature of the order which is appealed against is relevant for the purpose of determining whether an appeal would lie in this Court or not.”The Court however granted liberty to the Department to avail of its remedy under Section 35L before the Top Court.Appearance: Mr. Atul Tripathi, SSC with Mr. Gaurav Mani Tripathi & Mr. Shubham Mishra, Advocates for Appellant; Mr. J. K. Mittal with Ms. Vandana Mittal & Mr. Mukesh Choudhary, Advocates for RespondentCase title: Commissioner Of Service Tax Delhi v. Shyam Spectra Private LimitedCitation: 2025 LiveLaw (Del) 748Case no.: SERTA 5/2025Click here to read judgment

Appeal On Taxability Including Point Of Limitation Doesn't Lie Before HC U/S 35G Of Central Excise Act: Delhi High Court

Kapil Dhyani

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