Facts of the Case

The present appeal was filed by the Commissioner of CGST, Delhi South Commissionerate before the Delhi High Court under Section 35G of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994, challenging the order passed by the CESTAT dated 4th November 2024.

The dispute originated from an Order-in-Original dated 28th March 2018, wherein it was held that transfer of development rights was not liable to service tax. The Revenue Department challenged this order before the Tribunal; however, the appeal was rejected on the ground of limitation.

Subsequently, the Revenue approached the High Court challenging the CESTAT order.

Issues Involved

  1. Whether the transfer of development rights is liable to service tax.
  2. Whether an appeal against the CESTAT order lies before the High Court under Section 35G or before the Supreme Court under Section 35L of the Central Excise Act, 1944.
  3. Whether the present appeal is maintainable before the High Court when the underlying issue involves taxability. 

Petitioner’s Arguments (Revenue Department)

  • The Appellant challenged the CESTAT order which dismissed the Revenue’s appeal on limitation grounds.
  • It was contended that the Tribunal’s order was erroneous and required interference by the High Court.
  • The appeal was filed invoking Section 35G of the Central Excise Act, asserting jurisdiction of the High Court. 

Respondent’s Arguments (Assessee)

  • The Respondent raised a preliminary objection regarding maintainability of the appeal.
  • It was argued that in view of Sections 35G and 35L of the Central Excise Act, issues relating to taxability and rate of duty/service tax fall within the jurisdiction of the Supreme Court.
  • Therefore, the appeal before the High Court was not maintainable.

Court Findings / Order

The Delhi High Court relied on its earlier judgment in Commissioner of CGST & Central Excise Delhi South vs M/s Spicejet Ltd. and other precedents.

The Court held:

  • Even if the Tribunal dismissed the appeal on limitation, the nature of the original dispute must be examined.
  • The core issue involved leviability of service tax, which falls within the ambit of Section 35L.
  • Appeals involving determination of taxability are not maintainable before the High Court under Section 35G.

Accordingly, the Court:

  • Dismissed the appeal as not maintainable, and
  • Granted liberty to the Appellant to approach the Hon’ble Supreme Court.
  • Extended the limitation period to file an appeal before the Supreme Court till 15th July 2025. 

Important Clarification

The Court clarified that:

  • The forum of appeal is determined by the nature of the issue, not merely by the reasoning adopted by CESTAT (e.g., limitation).
  • If the dispute involves taxability or rate of tax, the appropriate forum is the Supreme Court under Section 35L, even if the Tribunal has decided only a procedural issue like limitation.
  • Dismissal of appeal on maintainability does not bar the Appellant from pursuing remedies before the appropriate forum with benefit of limitation exclusion. 

Sections Involved

  • Section 35G, Central Excise Act, 1944
  • Section 35L, Central Excise Act, 1944
  • Section 83, Finance Act, 1994
  • Section 14, Limitation Act, 1963

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/PMS05052025SERTA42025_164808.pdf

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