Commissioner Of GST And Central Excise,R0Urkela vs. K.D.Sharma

Facts

The Department, Commissioner of GST & Central Excise, Rourkela Commissionerate, appealed an order dated July 14, 2017, by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT). The CESTAT had set aside an order dated March 30, 2007, passed by the Commissioner of Central Excise. The Respondent-Assessee, K.D. Sharma, a Proprietor, was engaged as a Raising & Transporting Contractor for mining activities at Kalta Iron Ore Mines, Steel Authority of India Ltd. A show-cause notice was issued on August 3, 2004, proposing a demand for service tax on the basis that the Assessee rendered 'Cargo Handling Service' under Section 65(23) of the Finance Act, 1994. The Assessee appealed to the CESTAT, which agreed that the work was essentially mining, and a specific entry for tax on mining services was introduced only from June 1, 2007. Therefore, the demand was held unsustainable.

Held

The Court held that the appeal is not maintainable before the High Court. Regarding the monetary limit, the Court noted the Respondent-Assessee's contention that the basic duty involved is below Rs. 1 Crore, making the appeal below the monetary limit. The Court also addressed the classification dispute, holding that whether the service is 'Cargo Handling Services' or 'mining service' is essentially a classification dispute. Following the judgment of the Karnataka High Court in Commissioner of S.T. Bangalore v. Scott Wilson Kirkpatrick (I) Pvt. Ltd. (2011 (23) STR 321 (Kar)), the Court concluded that an appeal against an order of the CESTAT in such a classification dispute would lie only to the Supreme Court of India. Consequently, the Court declined to interfere in the present appeal, leaving it open for the Department to avail other remedies.

Key Issues

1. Whether the present appeal is maintainable before this Court given that the tax effect is below the monetary limit of Rs. 1 Crore, as argued by the Respondent-Assessee, relying on Para-2 of the Circular dated August 17, 2011, which clarifies that 'Monetary limit' refers to excise duty and excludes penalty or interest. The Petitioner-Department contended that including the penalty amount would exceed Rs. 1 Crore. Additionally, the Department argued that the appeal is maintainable under Para-4 of the instruction dated August 22, 2019, of the Central Board of Indirect Taxes & Customs (CBITC), as it involves a substantial question of law as described in Para-1.3 of the earlier instruction dated August 17, 2011, citing a previous High Court order referring the classification issue to a larger CESTAT bench. 2. Whether the service rendered by the Assessee constitutes 'Cargo Handling Service' or 'mining service', a classification dispute. The Respondent-Assessee pointed out that the previous High Court order was recalled, negating the reference to the larger CESTAT bench.