2025 (5) TMI 652 - HC - Service Tax

Service Tax Appeal Dismissed: Substantive Issues Must Be Filed Under Section 35L, Not Section 35G

The Commissioner CGST Delhi South Commissionerate Versus M/s. Haamid Real Estate Pvt Ltd.

HC dismissed the appeal challenging a CESTAT order on service tax limitation grounds. The court held that appeals involving substantive service tax issues ... Maintainability of the present appeal in view of Section 35G and 35L of the Central Excise Act, 1944, which applies in respect of service tax cases as well - Levy of service tax - transfer of development rights - time limitation - HELD THAT:- This Court had an occasion to consider a similar matter in Commissioner of CGST and Central Excise Delhi South v. M/s Spicejet Ltd. [2024 (12) TMI 1408 - DELHI HIGH COURT] wherein this Court held that 'In view of the above decisions and considering the nature of issues that have been decided vide the order dated 31st March, 2016, passed by the Commissioner of Service Tax as also the impugned order of the CESTAT dated 3rd July, 2023, this Court is of the opinion that an appeal against the said impugned order would lie, in terms of Section 35L of the Central Excise Act, 1944, to the Hon’ble Supreme Court.' The present appeal would not be maintainable before this Court. Accordingly, the appeal is dismissed with liberty to the Appellant to approach the Hon’ble Supreme Court - In the facts and circumstances of this case, time to file the appeal is extended till 15th July, 2025. ISSUES PRESENTED AND CONSIDERED 1. Whether the transfer of development rights constitutes a service liable to service tax under the applicable law. 2. Whether the present appeal against an order of the appellate tribunal is maintainable before the High Court in view of Sections 35G and 35L of the Central Excise Act (as applicable to service tax) and Section 83 of the Finance Act. 3. Whether an order of the Commissioner that addresses substantive questions (e.g., leviability of service tax, CENVAT credit, imposition of penalty) but whose appeal to the tribunal was disposed on limitation grounds can be the subject of an appeal to the High Court, or whether the remedy lies to the Supreme Court. 4. Whether time for filing a higher appeal may be extended in the circumstances of the matter. ISSUE-WISE DETAILED ANALYSIS Issue 1: Liability of transfer of development rights to service tax Legal framework: The question concerns the scope of service tax liability under the statutory scheme governing service taxation (Central Excise Act provisions as applied to service tax and the Finance Act provisions), specifically whether transfer of development rights falls within taxable services. Precedent Treatment: The Commissioner in the original order examined whether the service was taxable and concluded it was not; the appellate tribunal's order under challenge arose from an appeal by Revenue which was rejected on limitation grounds. Earlier judicial consideration of similar issues was noted in the Court's prior treatment of analogous appeals. Interpretation and reasoning: The judgment records that the original authority had considered the substantive question of leviability and held that the service would not be taxable. However, because the tribunal's impugned order dealt with limitation, the High Court's present analysis focuses on jurisdictional and procedural propriety rather than re-adjudicating the substantive tax question. The Court thus refrains from resolving the substantive question in this appeal because the forum for challenge is governed by the statutory appellate scheme. Ratio vs. Obiter: The treatment of the substantive liability issue is obiter in the present judgment insofar as the Court does not decide the substantive levy question; the Court's mention of the original finding (non-taxability) is factual context rather than a precedent-setting ratio. Conclusions: No substantive conclusion on the taxability of transfer of development rights is reached; the matter is left to be pursued in the appropriate appellate forum under the statutory scheme. Issue 2: Maintainability of the appeal before the High Court under Sections 35G and 35L Legal framework: Sections 35G and 35L of the Central Excise Act (as applied to service tax) set out the appellate jurisdiction and limitations on appeals to the High Court; Section 83 of the Finance Act is invoked in relation to statutory provisions applicable to service tax appeals. Precedent Treatment: The Court refers to its prior consideration of similar matters where it analyzed whether an appeal lies to the High Court or whether the statutory route confines the remedy to the Supreme Court. The Court relied on prior decisions addressing when High Court jurisdiction is ousted by the specialized statutory appellate route. Interpretation and reasoning: The Court reasons that despite the tribunal having decided only the limitation issue, the nature of the original order (which considered substantive matters such as CENVAT credit, penalty and leviability) controls the forum for further appeal. Where the original order addressed substantive tax issues, an appeal against the tribunal's order would lie to the Supreme Court under the statutory scheme rather than to the High Court. The mere fact that the tribunal limited its consideration to limitation does not convert the impugned order into one entertainable by the High Court. Ratio vs. Obiter: The holding that an appeal against the tribunal's order in such circumstances is not maintainable before the High Court but lies to the Supreme Court is treated as ratio addressing jurisdiction and maintainability. Conclusions: The appeal is not maintainable before the High Court under the statutory appellate scheme (Sections 35G/35L as applied), and the proper remedy for the Department is to approach the Supreme Court. The present appeal is dismissed on maintainability grounds. Issue 3: Effect of a tribunal decision based on limitation when the original order dealt with substantive tax questions Legal framework: Principles concerning the scope of appellate review, effect of limitation defences, and statutory allocation of appellate forums govern whether a tribunal's limited ground of decision affects forum selection for subsequent appeals. Precedent Treatment: The Court draws on its earlier ruling in a related proceeding where similar facts arose (original order addressing substantive tax matters; tribunal deciding limitation). Those prior rulings held that the character of the original order governs the appellate route even if the tribunal confines itself to limitation. Interpretation and reasoning: The Court accepts that when the original authority has decided substantive issues, an appellate order-even if disposed on limitation-does not convert the matter into one within the High Court's jurisdiction. The forum for appeal is determined by the nature of the original order, not by the partial basis on which the tribunal disposed of the appeal. Therefore, an appeal to the High Court is improper when statutory scheme designates the Supreme Court as the appellate forum for decisions involving those substantive issues. Ratio vs. Obiter: This reasoning constitutes ratio on the point of forum determination and effect of tribunal limitation decisions. Conclusions: A tribunal decision on limitation alone does not render an appeal to the High Court maintainable where the original order adjudicated substantive tax issues; the remedy lies under the statutory appellate route to the Supreme Court. Issue 4: Extension of time to file appeal Legal framework: Courts possess equitable jurisdiction under limitation principles to extend time for filing appeals where grounds are made out and statutory or procedural timelines can be enlarged by judicial order. Precedent Treatment: The Court noted that dismissal for non-maintainability does not preclude the Department from seeking remedies, including relying on the Limitation Act to seek condonation for periods during which matters were pending. Interpretation and reasoning: In light of the course of litigation and to permit pursuit of the appropriate remedy, the Court extended time for filing the appeal to the Supreme Court until a specified date. This extension recognizes the practical need to preserve the Revenue's appellate rights notwithstanding dismissal for non-maintainability before the High Court. Ratio vs. Obiter: The grant of limited extension in time is a dispositive order in the facts of this case; it is a practical measure and not a precedent on limitation law generally (obiter for broader application, but binding as to the parties). Conclusions: Time to file the appropriate higher appeal was extended to a specified date to enable the Department to approach the Supreme Court; dismissal on maintainability does not prejudice the Department from seeking condonation under the Limitation Act for periods during which this appeal was pending.