Taxability of services under the business auxiliary service is a substantial question of law, necessitating appeals to the Supreme Court per Section 35L of the Central Excise Act.

JUDGMENT :

Prathiba M. Singh, J.

1. This hearing has been done through hybrid mode.

2. These appeals arise out of the impugned judgment dated 3^rd July, 2023 passed by Customs Excise and Service Tax Appellate Tribunal (hereinafter, ‘CESTAT’). The issue which has been captured in the CESTAT order itself reads as under:

“The issue involved in all the appeals is as to whether the amount paid by the respondents to overseas companies situated in Dubai and shown as “commission” in the shipping documents in relation to export of readymade garments by the respondents is liable to be taxed under “business auxiliary service”, as defined under section 65(19) of the Finance Act, 1994.”

3. Dr. G.K. Sarkar, ld. Counsel for the Respondent, raises a preliminary objection that since the issue involves the question as to whether the services are taxable or not, the appeal would lie to the Supreme Court under Section 35L of the Central Excise Act, 1944.

4. A perusal of the above captured issue would show that the question is whether the Respondents are liable to be taxed under ‘business auxiliary service’ or not. This would, therefore, be a root question. Upon determination of taxability, the applicable rate would also have to be determined.

5. This is the second round in this litigation. In the first round, the Supreme Court in Civil Appeal Nos. 5869-5874 of 2019 titled ‘Commissioner of Service Tax (CST) v. M/s Sidhi Designers Pvt. Ltd. & Ors.’ had remanded the matter to the Appellate Tribunal in the following terms vide order dated 26^th July, 2019:

These appeals take exception to the judgment and order dated 02.03.2017 passed by the Customs Excise and Service Tax Appellate Tribunal in Appeal Nos.ST/52112- 52114 & 52142-52143/2014 with ST/CO/50455/2013-DB, whereby the appeals preferred by the department came to be dismissed on the specious ground that the issues raised in the appeals have already been adjudicated by the High Court in its decision dated 21.12.2016 in W.P. (C) No.4861 of 2015 and connected cases.

After considering the rival submissions, we have no hesitation in taking the view that the subject matter before the High Court of Delhi in the aforestated Writ Petition, which was filed by the assessee, was limited to the claim of refund which was rejected by the department. The observations made in the judgment of the High Court, therefore, will have to be understood only in that context; and not as having adjudicated the correctness of the order passed by the adjudicating authority, which was the subject matter of appeals before the Appellate Tribunal at the instance of the department.

In the circumstances, the impugned order deserves to be set aside and parties relegated before the Appellate Tribunal for reconsideration of the appeals on its own merits and in accordance with law, uninfluenced by any observation made by the High Court.

We, however, make it clear that we are not expressing any opinion either way on the contentions available to the parties in the remanded appeals. All questions therein are left open.

The Civil Appeals are disposed of in the above terms.

Pending applications, if any, stand disposed of.

6. Post the said remand, the impugned order has been passed by the CESTAT. Considering the nature of the matter, the Appellants are permitted to avail of remedies in accordance with law under Section 35L of the Central Excise Act, 1944. Moreover, a Co-ordinate Bench of this Court in the decision in SERTA 2/2024 titled ‘ Commissioner of CGST And Central Excise Delhi South v. M/s Spicejet Ltd .’ held as under:

“10. However, during the course of hearing, it is clear to this Court that upon the issue of