Commissioner of Service Tax vs Hero Honda Motors Ltd.

C.M. No. 1917/2013 : This is an application for condonation of delay of ten days in filing of the appeal. It is stated that this delay was occasioned as the Registry had put an objection with regard to deficiency in court fees pursuant to the amendment made in the applicable schedule to the Court Fees Act. It is pointed out that it took time to get the additional court fees. Learned counsel for the respondent states that he has no objection in case the delay in filing of the appeal is condoned. Application is allowed.

CEAC No. 7/2013

Impugned order passed by the Customs, Excise, Service Tax Appellate Tribunal dated 12th March, 2012 [ 2012 (34) SCT 417 ] has been made subject matter of challenge by the respondent-Hero Honda Motors Limited before the Supreme Court in Civil Appeal No. 5543/2012. The said appeal was admitted vide order dated 9th August, 2012.

Revenue, i.e., Service Tax authorities, are also aggrieved by the observations and findings recorded in the said order dated 12th March, 2012 and have approached the High Court by way of the present appeal u/s 35G of the Central Excise Act, 1944 read with Section 83 of the Finance Act.

It is an accepted position that u/s 35L of the Central Excise Act read with Section 83 of the Finance Act, appeals relating to rate of duty or valuation are maintainable before the Supreme Court, whereas u/s 35G an appeal on other aspects/issues is to be filed before the High Court. The relevant provisions, i.e., Sections 35G and 35L of the Central Excise Act read as under:

35G. Statement of case to High Court.--(1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on or after 1st Day of July, 2003 (not being an order relating, among other things, to the determination to the 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) The Commissioner of Central Excise or the other party aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court and such appeal under this sub-section shall be -

(a) filed within one hundred and eighty days from the date on which the order appealed against is received by the Commissioner of Central Excise or the other party.

(b) accompanied by a fee of two hundred rupees where such appeal is filed by the other party.

(c) in the form of a memorandum of appeal precisely stating therein the substantial question of law involved.

(3) Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question.

(4) The appeal shall be heard only on the question so formulated, and the respondent shall, at the hearing of the appeal, be allowed to argue that the case does not involve such question.

Provided that nothing in this sub-section shall be deemed to take away abridge the power of Court to hear, for reasons to be recorded, the appeal or any other substantial question of law not formulated by it, if it is satisfied that the case involves such question.

(5) The High Court shall decide the question of law so formulated and deliver such judgment thereon containing the grounds on which decision is founded and may award such cost as it deems fit.

(6) The High Court may determine any issue which -

(a) has not been determined by the Appellate Tribunal, or

(b) has been wrongly determined by the Appellate Tribunal, by reason of a decision of such question of law as is referred to in sub-section (1).

(7) When an appeal has been filed before the High Court, it shall be heard by a bench of not less than two judges of the High Court, and shall be decided in accordance with the opinion of such judges or of the majority, if any, of such judges.

(8) Where there is no such majority, the judges shall state the point of law upon which they differ and the case shall, then, be heard upon that point only by one or more of the other judges of High Court and such point shall be decided according to the opinion of the majority of the judges who have heard the cases including those who first heard it.

(9) Save as otherwise provided in this Act, the provisions of CPC 1908 (5 of 1908), relating to the appeals of High Court shall, as far as may be, apply in cases of appeals under this section.

35L. Appeal to the Supreme Court.--An appeal shall lie to the Supreme Court from -

(a) any judgment of the High Court delivered -

(i) In an appeal made u/s 35G; or

(ii) On a reference made u/s 35G by the Appellate Tribunal before the first day of July, 2003;

(iii) On a reference made u/s 35H, in any case which, on its own motion or on an oral application made by or on behalf of the party aggrieved, immediately after the passing of the judgment, the High Court certifies to be a fit one for appeal to the Supreme Court; or

(b) any order passed before the establishment of the National Tax Tribunal 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.

It is clear from the language of Section 35G that no appeal will lie to the High Court if the order passed by the Tribunal relates to among other things rate of duty or to valuation of taxable service. In such cases, appeal will lie u/s 35L before the Supreme Court. In the present case, the impugned order dated 12th March, 2012 passed by the Tribunal among other issues/question decides the question of rate of duty and valuation of taxable services. In view of the said position and as the respondent herein has already filed an appeal, which is pending before the Supreme Court, we think that the appeal filed by the Revenue before the High Court should not be entertained and cannot be entertained. The appropriate remedy before the appellant is to approach the Supreme Court. The view we have taken is in consonance with and in accord with the view taken by the Supreme Court in Navin Chemicals Mfg. and Trading Co. Ltd. Vs. Collector of Customs, and this Court in Commissioner of Service Tax Vs. Delhi Gymkhana Club Ltd., and a recent decision of this Court in Commissioner of Service Tax Delhi Vs. Bharti Airtel Limited, wherein it has been held as under: 5. In the present case, we find that the impugned order deals not only with the question of limitation but also with the question of valuation. It so happens that in the present case, the issue with regard to the valuation of the taxable services was decided in favour of the Revenue but, because the extended period of limitation was not invokable, as per the Tribunal, the respondent-assessee did not prefer any appeal against the said order. But, the order which is impugned before us deals with both the issues, that is, the issue of valuation of taxable services as also the issue of limitation. 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 issue 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.

In view of the fact that the impugned order deals with the question of valuation apart from the question of limitation, this appeal would not be maintainable u/s 35G of the Central Excise Act read with Section 83 of the Finance Act, 1994. The objection taken by the learned counsel for the respondent is well founded. It is for this reason that we dismiss this appeal as being not maintainable.

In view of the aforesaid legal position, the appeal is directed to be returned to the appellant as it is not maintainable before the High Court. The case/appeal will be treated as disposed of.