TaxTMI 
TaxTMI 
2011 (4) TMI 500
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....ect preparation which includes feasibility study, screening of the roads, identify analysis and developmental proposals for institutional measures and such other engineering consultancy services which are more descriptively mentioned in the Appendix A of the said agreement. In terms of the said agreement, the assessee billed/charged gross amount of Rs. 30,02,26,393 from their clients both in local currency and in foreign currency. The value of taxable service rendered i.e., an amount of Rs. 22,15,54,047 in local currency and an amount of Rs. 7,86,72,346 in foreign currency for the period from 1-3-1999 to 31-3-2004. The assessee was required to pay service tax of Rs. 1,57,03,274 on the above value of taxable service at the rate of 5 per cent till 13-5-2003 and 8 per cent from 14-5-2003. However, the assessee had paid only a sum of Rs. 43,21,264. There was a short payment of service tax to the extent of Rs. 1,13,82,010. Therefore, a show-cause notice was issued on 11-8-2004 requiring the assessee to show cause why action should not be taken as mentioned in the said notice being the value of taxable service escaped assessment or has been under-assessed, short payment of service tax, i....
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..... 2/1999-ST, dated 28-2-1999, 06/1999-ST, dated 9-4-1999, 21/2003-ST, dated 20-11-2003 and granting exemption in favour of the assessee without verifying the conditions prescribed therein wherein it is stated that foreign exchange received was repatriated from or sent outside India? 6. At the time of hearing, the learned counsel for the assessee raised an objection regarding maintainability of this appeal before this Court. He contended that this appeal is filed under section 35G of the Central Excise Act, 1944, for short hereinafter referred to as "the Act", in view of section 83 of the Finance Act, 1994. He contended that, as is clear from the questions of law raised in this case as well as the order of the Tribunal, this appeal involves among other things determination of question relating to the rate of duty of service tax as well as to the value of taxable service for purposes of assessment. Under section 35G of the Excise Act, the High Court has no jurisdiction to decide the said questions as under section 35L(b) of the Act it is the Supreme Court which is conferred the jurisdiction to decide such questions and, therefore, the appeal is not maintainable and is liable to be....
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....the aforesaid contention, firstly it is necessary to see the statutory provisions as contained in sections 35G and 35L which reads as under: "35G. Appeal 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 the 1st day of July, 2003 (not being an order 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 the purposes of assessment), if the High Court is satisfied that the case involves a substantial question of law. 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 under section 35G; or (ii) on a reference made under section 35G by the Appellate Tribunal before the 1st day of July, 2003; (iii) on a reference made under section 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 passing of the judgment, the High Court certifies to be a fit one for appeal to the Supreme Court; or &....
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...."for the purpose of assessment". That means the order referred to therein, is an order passed in the course of assessment. Therefore, all orders passed in the course of assessment involving the determination of any question having a relation to the rate of duty of service or to the value of Service, cannot be the subject-matter of appeal before the High Court. By the use of the word 'among other things' it is made clear, even order which may not be directly related to the rate of duty of service or the value of Service, however which are intermingled with those matters are also excluded. In other words those are not the only orders contemplated by the legislation. In order to understand the width and depth of the orders covered under these words, it is necessary to know the meaning of "assessment". What is assessment? 14. The word "assessment" is used as meaning sometimes the computation of rate of duty, sometimes the assessable value of Service and sometimes the whole procedure laid down under the Act for imposing duty liability upon the manufacturer or importer. The word 'assessment' is, thus, capable of bearing a very comprehensive meaning in the context, i....
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....to exclude proceedings for assessment of escaped income or under-assessed income. ......... In its normal sense, "to assess" means "to fix the amount of tax or to determine such amount". The process of re-assessment is to the same purpose and is included in the connotation of the term "assessment". The reasons which led us to give a comprehensive meaning to the word "assessment in section 13(i) of the Finance Act, 1950, operate equally with regard to the saving provisions under present consideration." 18. The Supreme court, in the case of C.A. Abraham v. ITO [1961] 41 ITR 425 explaining the meaning of the word 'assessment' in the context of the Income-tax Act held as under :- "A review of the provisions of Chapter IV of the Act sufficiently discloses that the word "assessment" has been used in its widest connotation in that chapter. The title of the chapter is "Deductions and Assessment." The section which deals with assessment merely as computation of income is section 23; but several sections deal not with computation of income, but determination of liability, machinery for imposing liability and the procedure in that behalf. Section 18A deals with advance payment o....
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....r of the power conferred upon this Court, original or appellate, by its constitution being judicial, the determination or order sought to be appealed from must have the character of a judicial adjudication." Meaning of "rate of duty" 20. It is in this background we have to interpret the words "rate of duty". The question is, what is the meaning attached to the 'rate of duty' as mentioned under these provisions. In order to understand the word 'rate of duty' and the dispute relating to that, it is useful to refer to the meaning assigned to the said word by the Parliament by way of an Explanation to sub-section (5) of section 35G by amendment Act 29/1988. The said amendment was intended to be brought into force from the date to be notified. However, it was not brought into force at all. Notwithstanding the same, in order to understand the meaning assigned to the word rate of duty by the Parliament as per the aforesaid intended amendment, the same could be looked into in order to appreciate the phrase 'rate of duty' used in sections 35G and 35L of the Act which reads as under :- "Explanation.-For the 'purposes of this sub-section, the determinat....
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....ls with the power of revision of Board or Commissioner of Central Excise in certain case. In other words what is sought to be conveyed by the Explanation is that the authorities while exercising the revisional jurisdiction shall not go into those questions. That in no way comes in the way of understanding the meaning of the phrase 'rate of duty'. On the contrary it clearly sets out the intention of the Legislature insofor as the meaning to be attributed to the said phrase. Therefore, the said meaning could be read into the phrase wherever it is used in the other parts of the statute, as held by the Apex Court in Navin Chemicals case. It also would be in conformity with the interpretation placed on the said phrase by the Apex Court as well as the High Court, as is clear from the following decisions. 21. The Supreme Court had an occasion to consider the meaning of the word 'rate' in Sundaram & Co. (P.) Ltd. v. CIT [1967] 66 ITR 604 where it was held as under :- "The assumption that the expression "rate" has been used in section 34(1) as meaning a fraction of total income is, in our judgment not warranted. By the use of the expression "rate" in the context in whi....
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....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 would lie to the Supreme Court. It is, thus, clear from the aforesaid proviso that an appeal against an order passed 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 would lie to the Supreme Court and not the High Court." 25. The Apex Court in the case of ITC Ltd. v. Collector of Central Excise 1997 (94) ELT 456 dealing with section 35L(b) of the Central Excise Act, 1944 has held as under : "A perusal of the said clause shows that an appeal lies to this Court against an order passed, by the Tribunal relating to the determination of any question relating to the rate of duty of excise or to the value of goods for the purposes of assessment Sri Ravinder Narain as submitted that the impugned order passed by the Tribunal relates to the value of goods. The said question relating to value of goods has however, arisen on the claims for refund of excise duty....
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.... purposes of assessment'. It seems to us that the key lies in the words 'for the purpose of assessment' therein. Where the appeal involves the determination of any question that has a relation to the rate of customs duty for the purposes of assessment that appeal, must be heard by a Special Bench. Similarly, where the appeal involves the determination of any question that has a relation to the value of goods for the purposes of assessment, that appeal must be heard by a Special Bench. Cases that relate to the rate of customs duty for the purposes of assessment and which relate to the value of goods for the purposes of assessment are advisedly treated separately and placed before Special Benches for decision because they, more often than not, are of importance not only to the importers who are parties thereto but also to many other importers who import or propose to import the same or similar goods. In the decisions of CEGAT in such matters would have wide application they are, by the terms of the statute, to be rendered by Special Benches. The phrase "relation to" is, ordinarily, of wide import but, in the context of its use in the said expression in section 129C, it mu....
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....the question requires determination have a direct and proximate relation, for the purposes of assessment to the rate of duty applicable to the goods or to the value of the goods." 28. In the case of Commissioner of Customs v. Jayathi Krishna & Co. 2000 (119) ELT 4 (SC), the question involved was whether the assessee is liable to pay interest under section 61(2) of the Customs Act. When the imposition of interest under the aforesaid provision was challenged before the Tribunal, the Tribunal held that DEEC Scheme having been made applicable to the goods in question, the question of payment of interest would not arise at all. Against the said order, the revenue preferred an appeal directly to the Supreme Court under section 130E of the Act, which came to be dismissed. 29. In the case of Commissioner of Customs (Export) v. Nicco Batteries Ltd. 2001 (129) ELT 292 (SC), the benefit of exemption notification was granted to earlier four consignments and at the stage of clearance of the fifth consignment, the said benefit was denied under the orders of the superior officer without assigning reasons. The Tribunal found fault with the said action and extended the benefit to the fifth co....
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....ction 130 of the Customs Act. It was held that the determination of question involved in this case does not have a relation to the rate of duty or the value of the goods for the purpose of assessment and therefore, the appeal was maintainable. The question involved therein was whether Prawn/Shrimp is also fish and liable to export cess under Agricultural Produce Cess Act, 1940. In coming to the conclusion they relied on the judgment of the Apex Court in Navin Chemicals Mfg. & Trading Co. Ltd.'s case (supra) wherein an observation was made that the case did not have a direct or proximate relation for the purpose of assessment either to the rate of duty applicable to the said goods or to the value thereof. All that the Additional Collector's order did was to confiscate the said goods allowing the assessee option of redeeming them upon payment of a fine of Rs. 10,000. That the assessee might avail of the option, pay the fine and clear the said goods. When question as to the rate of duty and value for the purpose of assessment might possibly arise is far too remote a contingency to satisfy the test that is laid down. Therefore, it was held that the principle laid down in the sa....
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....ification of Service under the Tariff and whether or not they are covered by an exemption notification; and whether the value of Service for the purposes of assessment should be enhanced or reduced having regard to certain matters that the said Act provides for. Questions relating to the rate of duty and to the value of Service for purposes of assessment are questions that squarely fall within the meaning of the said expression. A dispute as to the classification of Service and as to whether or not they are covered by an exemption notification relates directly and proximately to the rate of duty applicable thereto for purposes of assessment. Whether the value of Service for purposes of assessment is required to be increased or decreased is a question that relates directly and proximately to the value of Service for purposes of assessment. Determination of rate of duty in relation to any Service include determination of a question whether any Service or not, whether the process if any undertaken in the service centre amounts to taxable Service or not, and if the Service rendered during that process are excisable goods or not would fall within the meaning of the expression 'deter....
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.... the purposes of assessment lies to the Supreme Court under section 35L(b) of the Act and not to the High Court under section 35G. 38. The intention behind this bifurcation of jurisdiction between the Apex Court and the High Court seems to be that more often than not, any decision on these aforesaid aspects not only affects the interest of the parties rendering services who are parties to a dispute, but also to the parties rendering those services throughout the country. In a country governed by Parliamentary legislation because of the territorial bifurcation in forming states and because of the divergent opinion which is possible, the service tax payable would vary from place to place. In order to bring uniformity in the levy of service tax throughout the country and consequently to see that the country's finance is not affected, the Parliament has vested the jurisdiction to decide the disputes with the Apex Court. Therefore, we see a policy underlining this bifurcation of the jurisdiction between the Apex Court and the High Courts. All other matters other than what is set out above, which relates to the individual service providers and all disputes based on assessment orde....