Service tax is applicable to construction services provided to non-commercial state entities, and appeals on such matters regarding tax applicability must be taken to the Supreme Court.

ORDER :

AVNEESH JHINGAN, J.

1. This appeal under Section 35-G of the CENTRAL EXCISE ACT , 1944 (for short ‘the Act’) read with Section 83 of FINANCE ACT , 1994 is filed against the order passed by Customs Excise & Service Tax Appellate Tribunal (for short ‘the Tribunal’).

2. Brief facts are that the appellant is engaged in providing services of “Construction of Complex, Management, Maintenance or Repair services etc. A show cause notice dated 18.10.2011 was issued for the period 2006-2007 to 2010-2011 inter alia to show cause as to why service tax was not paid under the category of “Construction of Complex Services”. The Adjudicating Officer vide order dated 22.02.2013 confirmed the demand. The appellant after partial success before the First Appellate Authority and on dismissal of the appeal by the Tribunal, approached this Court.

3. Following substantial questions of law have been proposed:-

“I. Whether the Ld. CESTAT is correct to uphold that the services provided by the appellant to Rajasthan Housing Board/PHED which are non- commercial state Government entity/department are chargeable to Service Tax and are not exempt from Tax.

II. Whether the Ld. CESTAT is correct to upheld the levy of penalty on disputed issue of classification and interpretation thereof.

III. Whether the Ld. CESTAT is correct to upheld the invocation of extended period of limitation.”

4. Section 35(G) of the Act provides for appeal to the High Court against the order passed by the Tribunal, if this Court is satisfied that substantial questions of law is involved. The exception being the questions relating to rate of duty of excise or value of goods for the purpose of assessment. Section 35-L provides for the cases where the appeal shall lie to the Supreme Court. As per Section 35-L(i)(b) on issue of determination of question relating to rate of duty, value of the goods for purpose of assessment, the appeal shall lie to the Supreme Court.

5. The Supreme Court in the case of Navin Chemicals Mfg. And Trading Co. Ltd. Vs. Collector of Customs reported in (1993) 4 SCC 320 has held as under:-

“11. It will be seen that Sub-section 5 uses the said expression 'determination of any question having a relation to the rate of duty or to the value of goods for the purposes of assessment' and the Explanation thereto provides a definition of it 'for the purposes of this sub-section'. The Explanation says that the expression includes the determination of a question relating to the rate of duty; to the valuation of goods for purposes of assessment; to the classification of goods under the Tariff and whether or not they are covered by an exemption notification; and whether the value of goods for purposes/of assessment should be enhanced or reduced having regard to certain matters that the said Act provides for. Although this Explanation expressly confines the definition of the said expression to Sub-section 5 of Section 129-D, it is proper that the said expression used in the other parts of the said Act should be interpreted similarly. The statutory definition accords with the meaning we have, given to the said expression above. Questions relating to the rate of duty and to the value of goods for purposes of assessment are questions that squarely fall within the meaning of the said expression.”

(emphasis supplied)

6. The Supreme Court in another case of Commissioner of Customs, Bangalore-1 Vs. Motorola India Ltd. reported in (2019) 9 SCC 563 has held as under:-

“16. We are of the considered view that the Legislature has carved out only following categories of cases to which it has intended to give a special treatment of providing an appeal directly to the Court.

(i) determination of a question relating to a rate of