Principal Commissioner CGST Delhi, South Commissionerate v. M/S Bureau Of Energy Efficiency

What happened

By the order under challenge, CESTAT held that the Bureau of Energy Efficiency was not liable to pay service tax on fees charged under the heads Standards and Labelling (registration and labelling fee) and Processing Fee, which the department sought to categorise under technical inspection and certification service. The Tribunal followed its earlier decisions for periods from 2008-09 to 2013-14, which held that the fee was collected for the discharge of statutory obligations under the Act and the Regulations and was fixed in advance by law, so no service tax applied. The Revenue appealed to the High Court. The respondent objected, relying on section 35G and on the Division Bench decisions in Commissioner of Service Tax Delhi v. Konark Exim Pvt. Ltd. and Commissioner of CGST and Central Excise Delhi South v. Spicejet Ltd. The appellant argued that the respondent could not be said to be the State or Central Government, and that the protection was taken away by the amended section 65B(26A) of the Finance Act, 1994.

Questions before the court

• Is an appeal against a CESTAT order on the taxability of fees maintainable before the High Court under section 35G, or does it lie to the Supreme Court?

Why the court ruled this way

The Court noted that in Konark Exim, following Spicejet, it was held that on a question of taxability an appeal to the High Court under section 35G is not maintainable and the only remedy is an appeal to the Supreme Court under section 35L of the Central Excise Act, 1944 (paragraph 9). Since the objection was squarely supported by those authoritative pronouncements, the Court upheld the preliminary objection (paragraph 10).

Controlling point

The appeal is not maintainable before the High Court; the remedy is an appeal to the Supreme Court under section 35L.

Order and next steps

The appeal was disposed of as not maintainable. The appellant was given liberty to prefer an appeal under section 35L before the Supreme Court, the Court clarifying that it had not gone into the merits, and the appellant may seek condonation of delay in the Supreme Court having regard to the time spent in prosecuting the present appeal.

Practical implications

The Revenue or an assessee who loses before CESTAT on whether a service is taxable should file under section 35L in the Supreme Court, not in the High Court, and should explain the period spent in any wrong forum when seeking condonation of delay.

Limits of this ruling

• The Court did not examine whether statutory fees are subject to service tax or the effect of the amended section 65B(26A); it decided forum only.