High Court rules on service tax jurisdiction, directs Revenue to Apex Court

COMMR. OF SERVICE TAX, BANGALORE Versus PIMAC ENGG. & SERVICES P. LTD.

COMMR. OF SERVICE TAX, BANGALORE Versus PIMAC ENGG. & SERVICES P. LTD. - 2012 (26) S.T.R. 5 (Kar.) , 2012 (278) E.L.T. 158 (Kar.) Issues:
1. Challenge to Tribunal's order on service tax liability.
2. Interpretation of agreements for royalty and technical services.
3. Jurisdiction to decide service tax liability.

Analysis:
1. The High Court heard an appeal by the Revenue challenging a Tribunal order that held an assessee not liable to pay service tax. The assessee, a company, entered agreements with a foreign company for technical assistance and paid royalty fees. The Revenue issued a show cause notice for service tax, which the Assistant Commissioner initially dropped. However, the Commissioner later levied service tax, interest, and penalty. The Tribunal overturned the Commissioner's decision, leading the Revenue to appeal.

2. The key issue was whether the assessee was liable to pay service tax under the agreements. The assessee argued that the transactions were related to the sale of patented goods, not services, and hence not subject to service tax. The Assistant Commissioner accepted this argument, but the Commissioner disagreed, leading to the appeal. The High Court noted the nature of the transaction and the contentions raised by both parties.

3. The High Court, citing precedent, held that the issue of service tax liability falls under the exception in Section 35G, which is beyond its jurisdiction. Referring to a previous case, the Court stated that only the Apex Court has exclusive jurisdiction to decide such questions. Consequently, the High Court rejected the appeal as not maintainable, allowing the Revenue to approach the Apex Court. The Court directed the registry to return the certified copies for the Revenue to prefer the appeal at the appropriate forum.