Facts of the Case

The respondent company was engaged in providing multiple taxable services including security services, manpower supply, and construction-related services. The dispute arose from a service tax demand confirmed by the Department, which was later adjudicated by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) through an order dated 04.09.2025.

Aggrieved by the Tribunal’s decision, the Revenue (Principal Commissioner of CGST) filed an appeal before the Delhi High Court under Section 35G of the Central Excise Act, 1944.

 

Issues Involved

  1. Whether the services rendered by the respondent were correctly classified under taxable service categories.
  2. Whether the Tribunal erred in setting aside/modifying the service tax demand.
  3. Scope of interference by the High Court under Section 35G in findings of the Tribunal.

 

Petitioner’s Arguments (Revenue)

  • The Tribunal wrongly interpreted the nature of services provided by the respondent.
  • The activities clearly fell within taxable service categories and were liable to service tax.
  • The Tribunal failed to appreciate the evidence and statutory provisions correctly.
  • The order of the Tribunal deserved to be set aside.

 

Respondent’s Arguments (Assessee)

  • The Tribunal correctly appreciated facts and law.
  • The services rendered were either not taxable or were wrongly classified by the Department.
  • No substantial question of law arose to justify interference under Section 35G.
  • The appeal was merely an attempt to reappreciate factual findings.

 

Court’s Findings / Order

  • The High Court emphasized that its jurisdiction under Section 35G is limited to substantial questions of law.
  • It observed that the Tribunal had examined the factual matrix and evidence in detail.
  • The appeal filed by the Revenue did not raise any substantial question of law.
  • Accordingly, the Court declined to interfere with the Tribunal’s order.

 

Important Clarifications

  • High Courts cannot re-evaluate facts under Section 35G unless a substantial question of law arises.
  • Classification disputes based purely on facts are generally outside appellate interference.
  • Tribunal findings, if reasoned and evidence-based, are given deference.

Link to download the order -    https://delhihighcourt.nic.in/app/showFileJudgment/67927022026SERTA122026_182633.pdf

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