2026 (2) TMI 605 - HC - Service Tax

Memorandum of Cross-Objection admissibility under Section 35G restricted to post-admission hearing; premature cross-objections are dismissed.

Whether a memorandum of cross-objection may be heard before formal admission of a restricted statutory appeal turns on the requirement that a substantial ... Restricted appeal u/s 35G - substantial question of law - admission stage (Hearing on Admission) - cross-objection as a derivative right - jurisdiction to entertain appeal - preclusion of merits adjudication at admission stage - extended period of limitation u/s 73(1) of the Finance Act, 1994 - HELD THAT:- The architecture of a statutory appeal under Section 35G is uniquely structured and admits of no ambiguity. An appeal under this section is a restricted one; it’s very maintainability is contingent upon the Court’s satisfaction that a “substantial question of law” is involved. Until this Court applies its judicial mind and formally admits the appeal by framing such questions, the proceedings remain at an embryonic stage. To permit a hearing on a Cross- Objection before the main appeal is even admitted would be to adjudicate the merits of a dispute before the Court has determined whether it has the jurisdiction to entertain the challenge. In any event, a Cross-Objection is, in pith and substance, a derivative right—an appendage to a validly admitted appeal. The stage for pressing such an objection matures only after the main appeal has crossed the hurdle of admission and the Court has directed notice to the Respondent for a hearing on the merits. To permit a hearing on a Cross- Objection before the main appeal is even admitted would be to adjudicate the merits of a dispute before the Court has determined whether it has the jurisdiction to entertain the challenge. Accordingly, as the main appeal has not yet reached the stage of admission, the Cross-Objection is hereby dismissed as premature. The Appellant is directed to be ready with the Proposed Substantial Questions of Law, specifically addressing the Tribunal’s findings on the invocation of the extended period of limitation under Section 73(1) of the Finance Act, 1994. Issues: Whether a Memorandum of Cross-Objection can be heard and decided prior to the formal admission of an appeal filed under Section 35G of the Central Excise Act, 1944.Analysis: An appeal under Section 35G is a restricted statutory appeal maintainable only upon satisfaction that a substantial question of law is involved; the procedure is governed by Section 35G(9) and Order 41 Rule 22 of the Code of Civil Procedure, 1908. A Cross-Objection is a derivative right contingent upon the main appeal having been validly admitted and notice directed for hearing on the merits. At the Hearing on Admission the focus is confined to whether substantial questions of law are framed; the respondent lacks locus to litigate merits by way of Cross-Objection before admission. Permitting adjudication of a Cross-Objection at the pre-admission stage would circumvent the statutory filter and adjudicate merits prior to determination of jurisdiction to entertain the appeal.Conclusion: The Cross-Objection (OCOT 6 of 2025) is dismissed as premature; this conclusion is in favour of the Appellant.