The Principal Commissioner vs. M/S Raj Kishan And Co.

Held

The Court held that the appeal before it was not maintainable. The primary issue was the classification of services provided by the Respondent, specifically whether it fell under 'Construction of residential Complexes and Commercial or Industrial Construction Service' or 'Works Contract Service'. The Court found merit in the Respondent's contention that a dispute concerning classification constitutes a 'neat question of law'. According to Section 35L of the Central Excise Act, 1944, an appeal against an order of the CESTAT involving such a classification issue lies directly with the Supreme Court, even if other questions are involved. This view was supported by a previous decision of the High Court in CEA-18 of 2016 (Principal Commissioner of Customs, Central Excise and Service Tax v. Raja Dyeing). Therefore, the present appeal filed before the High Court was dismissed as not maintainable. The Appellant was granted liberty to avail appropriate remedies in accordance with law.

Facts

The Principal Commissioner, Central Goods & Services Tax, Chandigarh (Appellant) filed an appeal against an order dated 24th October, 2018, passed by the Customs Excise and Service Tax Appellate Tribunal (CESTAT). The dispute originated from a show cause notice dated 22nd October, 2010, issued to M/s Raj Kishan and Co. (Respondent) for recovery of service tax amounting to Rs. 2,64,19,926/- for the period April 2005 to March 2010, under Section 73(1) of the Finance Act, 1994. The Commissioner confirmed a demand of Rs. 2,29,03,962/- and imposed penalties. The CESTAT, after a remand and subsequent adjudication, finally set aside the Commissioner's order, holding that the service provided by the Respondent was classifiable as 'Works contract Service' and not 'Construction of Complex Services' or 'Commercial or Industrial Construction Service' as demanded.

Key Issues

1. Whether the CESTAT correctly held that the subject case is covered by the decision of the Hon'ble Supreme Court in Commissioner of C. Excise & Customs, Kerala v. Larsen & Toubro Ltd. (2015 (39) STR 913 (SC))? (Question of law). The Appellant contended that the CESTAT's decision was incorrect. The Respondent argued that the appeal is not maintainable before the High Court under Section 35G of the Central Excise Act, 1944, read with Section 174(2) of the CGST Act, as the core issue is classification, which, according to Section 35L of the Central Excise Act, 1944, should be appealed directly to the Supreme Court. The Respondent also pointed out the Appellant's inconsistent stance, citing an instance where the Appellant filed an appeal directly to the Supreme Court in a similar classification dispute (Vishranthi Homes Pvt. Ltd. v. Commissioner of Service Tax). The Appellant did not dispute that appeals have been directly preferred to the Supreme Court in similar classification matters.