TaxTMI 
TaxTMI 
Service Tax: Wrong Forum Can Stop the Right Appeal
X X X X Extracts X X X X
X X X X Extracts X X X X
....ervice Tax: Wrong Forum Can Stop the Right Appeal<br>By: - Raj Jaggi<br>Service Tax<br>Dated:- 5-8-2026<br>The Forum Was the Real Issue Every tax dispute has two journeys. The first concerns the merits. The second concerns the forum. The first asks whether tax is payable. The second asks where that question must be challenged. The second question may look procedural, but it can decide the fate of the entire appeal. If a party approaches the wrong forum, even a substantial legal grievance may remain unheard at that stage. The Delhi High Court judgment in The Commissioner of Central Tax, CGST Delhi East Versus Samiah International Builder Pvt. Ltd. - 2026 (7) TMI 1939 - DELHI HIGH COURT, addresses this precise issue. The appea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l was filed before the High Court under Section 35G of the Central Excise Act, 1944, as made applicable to Service Tax matters under the Finance Act, 1994, read with Section 174 of the CGST Act, 2017. The appeal challenged a CESTAT order on the taxability of a particular service. The respondent objected to the maintainability of the appeal before the High Court. The argument was that where CESTAT determines the taxability of a service, the appeal does not lie before the High Court. It must go to the Supreme Court under Section 35L of the Central Excise Act, 1944. The Delhi High Court accepted this objection and dismissed the appeal as not maintainable before it. Two Appellate Roads Serve Two Different Purposes The statutory scheme ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....under the Central Excise Act, 1944, provides two distinct appellate routes from orders of the CESTAT. Section 35G provides an appeal to the High Court, while Section 35L provides an appeal to the Supreme Court. These provisions are not overlapping options at the appellant's choice. They operate in different fields. Section 35G applies where an appeal from the CESTAT order involves a substantial question of law. In ordinary legal disputes, this route brings the matter before the jurisdictional High Court. However, Section 35G itself excludes certain matters from the High Court's jurisdiction. The High Court route is not available where the CESTAT order relates, among other things, to the determination of any question relating to t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he rate of duty or the value of goods for purposes of assessment. Section 35L deals with the excluded category. It provides for an appeal to the Supreme Court in matters involving the determination of questions relating to the rate of duty or the value for assessment. In Service Tax matters, this structure is applied through the Finance Act, 1994. Therefore, where the CESTAT decides whether a particular service is taxable, the issue is treated as one relating to taxability and assessment. The correct appellate forum is the Supreme Court, not the High Court. The distinction is not technical in a narrow sense. It reflects legislative design. Ordinary substantial questions of law may go to the High Court. But questions that affect the ve....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ry applicability, rate, classification or assessable value of tax travel directly to the Supreme Court. This ensures uniformity on issues that may have wider national impact. Taxability Is Closely Linked With Rate and Assessment A major point in the judgment concerns the meaning of the expression "determination of any question having a relation to the rate of duty". This expression has been interpreted broadly. It is not confined to the arithmetical rate, such as 5%, 12%, 18% or any other numerical rate. It includes questions that determine whether the levy applies at all. In Service Tax, if the dispute is whether a particular activity is a taxable service, the answer determines the very existence of the levy. If the service is tax....
X X X X Extracts X X X X
X X X X Extracts X X X X
....able, tax follows according to the applicable rate and valuation. If the service is not taxable, no rate applies because there is no taxable service in the first place. Therefore, taxability is not remote from the rate. It is directly connected with the assessment of tax. This is why taxability disputes cannot be treated as ordinary High Court appeal matters under Section 35G. A decision on taxability is foundational. It decides whether the activity falls within the charging and classification framework of Service Tax. Such a decision has a direct relation to the rate and assessment mechanism contemplated by Section 35l. For example, if the CESTAT decides that a construction activity is not taxable under a particular service category,....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the effect is not merely procedural. It wipes out the tax liability itself. Similarly, if the Tribunal holds that an activity falls within a taxable service, the assessee becomes liable to tax, subject to valuation, exemptions and other conditions. Such a determination belongs to the special appellate route under Section 35L. The High Court Followed Its Own Settled Line The respondent relied on the Delhi High Court decision in The Commissioner of Central Tax, CGST Delhi East Versus M/s. JMD Limited - 2024 (12) TMI 1456 - DELHI HIGH COURT In that case, the Division Bench held that when CESTAT determines the taxability of a particular service, an appeal against that determination lies before the Supreme Court under Section 3....
X X X X Extracts X X X X
X X X X Extracts X X X X
....5L, not before the High Court. The Delhi High Court also referred to Commissioner of CGST And Central Excise Delhi South Versus M/s. Spicejet Ltd. - 2024 (12) TMI 1408 - DELHI HIGH COURT. The principle emerging from these decisions is that taxability disputes are not ordinary substantial questions of law for a High Court appeal under Section 35G. They fall within the special appellate path under Section 35L. This is important for litigation discipline. When a High Court has already settled the forum question in its own jurisdiction, parties must follow that route unless they can show that the earlier decision overlooked a relevant statutory provision or binding precedent. In the present case, the Department could not persuad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e the Court that the earlier Delhi view required reconsideration. A Contrary Case Without Forum Discussion Cannot Control the Issue The Department relied on the Allahabad High Court decision in NKG Infrastructure Limited Versus Commissioner of Customs, Central Excise And Service Tax - 2016 (11) TMI 492 - ALLAHABAD HIGH COURT. The Department contended that this decision supported the maintainability of an appeal before the High Court where the taxability of a service was in dispute. The Delhi High Court did not accept this reliance. It observed that in NKG Infrastructure, only the questions framed in that case were adjudicated. The maintainability of the appeal before the High Court was neither raised nor considered. There....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fore, that decision could not be treated as authority on the forum question. This is a valuable legal principle. A judgment is an authority for what it actually decides. If a point was not raised, argued or considered, the judgment cannot normally be relied upon as a binding declaration on that point. Therefore, a case in which the High Court entertained an appeal without discussing maintainability cannot override a later direct ruling on maintainability. Forum Choice Is a Jurisdictional Discipline The judgment reminds professionals that choosing the correct appellate forum is not a clerical matter. It is a matter of jurisdiction. If the matter falls within Section 35L, the High Court cannot entertain it merely because the appeal r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aises a substantial question of law. The statutory route must be respected. This is particularly relevant in legacy Service Tax disputes. Many such disputes continue even after GST because of saving provisions, pending appeals and transitional litigation. Parties may instinctively file appeals before the High Courts under Section 35G. But if the issue relates to taxability, classification, rate, valuation or assessment-linked questions falling within Section 35L, the correct forum may be the Supreme Court. The consequence of approaching the wrong forum is delay. The appeal may be dismissed as not maintainable, and the party may then have to approach the correct forum. This causes avoidable loss of time and may raise limitation-related....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... concerns. Therefore, before filing an appeal from a CESTAT order, the first question should not be only whether there is a substantial question of law. The first question should be whether the question belongs to the High Court or the Supreme Court. The Saving Provision Does Not Change the Appellate Route The appeal also referred to Section 174 of the CGST Act, 2017. Section 174 deals with repeal and saving after the introduction of GST. It preserves certain rights, liabilities, proceedings and remedies under the earlier laws. This is why legacy Service Tax disputes continue to be adjudicated even after the GST regime. However, the saving provision does not alter the appellate forum prescribed for such legacy disputes. It preserve....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s the old proceedings and remedies as per the applicable statutory framework. Therefore, where the Central Excise Act provisions apply to Service Tax appeals, the distinction between Section 35G and Section 35L continues to matter. This point is practically important. GST has not erased pending Service Tax disputes. But the forum for legacy appeals must still be determined as per the saved statutory scheme. If the matter falls under Section 35L, it must go to the Supreme Court. Section 174 cannot be used to convert a Supreme Court appeal into a High Court appeal. The High Court Did Not Decide the Merits The Delhi High Court did not decide whether the respondent's service was taxable. It did not examine the correctness of CESTAT....
X X X X Extracts X X X X
X X X X Extracts X X X X
....'s conclusion on the merits. The appeal was disposed of solely on the ground of maintainability. The appellant was directed to avail the appropriate statutory remedy before the Supreme Court under Section 35L of the Central Excise Act, 1944. This distinction must be kept clear. Dismissal on maintainability is not an affirmation of CESTAT's order on the merits. It only means that the High Court was not the correct appellate forum. If the merits are pursued, they would have to be examined by the Supreme Court in accordance with law. For senior officers and professionals, this distinction is very important when explaining the judgment. The ruling is not a pronouncement on the taxability of the service involved in Samiah Internati....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onal Builder Pvt. Ltd. It is a pronouncement on the appellate route where taxability has been determined by CESTAT. The Practical Lesson for Departmental Appeals The judgment carries a direct message for departmental litigation management. Before filing an appeal against a CESTAT order, the Department must carefully identify the nature of the question decided by the Tribunal. If the question relates to taxability, rate, classification or valuation for assessment purposes, filing an appeal before the High Court may be risky. A proper litigation-screening note should first classify the issue. Is it a pure procedural issue? Is it a limitation issue? Is it a penalty issue independent of taxability? Is it a valuation or rate issue? Is i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t about whether a service is taxable at all? This classification should decide the forum. Mechanical filing before the High Court can result in dismissal and further delay. The same caution applies to taxpayers. If the CESTAT order goes against the assessee on taxability, the assessee must also consider whether the remedy lies before the Supreme Court. Filing in the wrong forum may create avoidable procedural complications. The GST Lesson Is About Forum Discipline Although the judgment arises under the Service Tax regime, its underlying principle is useful in GST litigation also. The CGST Act, 2017 also creates separate appellate routes. Section 117(1) provides for an appeal to the High Court from an order of the Appellate Tribunal....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... where the case involves a substantial question of law. However, Section 118(1)(a) provides that an appeal shall lie to the Supreme Court from an order passed by the Appellate Tribunal, where the order relates to a matter where two or more States, or a State and Centre, have a difference of views regarding the treatment of a transaction as intra-State or inter-State, or on the place of supply. Therefore, even under GST, forum selection is not merely procedural. Before filing an appeal, the party must identify whether the dispute belongs to the High Court route under Section 117 or the Supreme Court route under Section 118. A strong case on merits may still suffer if it is filed before the wrong forum. The first question in tax litigation....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is therefore not only what is the dispute, but also which forum has the legal authority to decide it. The Forum Is Part of the Remedy Samiah International Builder Pvt. Ltd. is a short decision, but its practical value is high. It reminds us that appellate remedies are not interchangeable. A High Court appeal under Section 35G and a Supreme Court appeal under Section 35L serve distinct statutory purposes. The distinction is part of the legislative design. When the CESTAT decides the taxability of a particular service, the appeal must go to the Supreme Court. A contrary decision that did not consider maintainability cannot create a different route. The Delhi High Court has therefore reinforced appellate discipline in legacy Service ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Tax matters. The final message is simple. In tax litigation, the question is not only whether an appeal should be filed, but also where it should be filed. If the dispute concerns taxability, the road does not stop at the High Court. Under Section 35L, it goes to the Supreme Court. =============<br> Scholarly articles for knowledge sharing by authors, experts, professionals ....