2026-VIL-158-CAL-ST
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SERVICE TAX High Court Cases

Service Tax - Scope of Section 35G of the Central Excise Act, 1944 – Demand of service tax on the 'Clearing and Forwarding' services provided by the appellant to Tata Iron and Steel Company (TISCO) and Tata Ryerson Limited (TRL) for the period September 1999 to March 2004 - Appellant argued that it did not provide the services of a ‘Clearing and Forwarding agent service to the said companies - Whether the appellant provided Clearing and Forwarding services to TISCO and TRL – HELD - The appellant undertook to receive and unload the materials of TISCO and TRL, transport the materials, arrange for the storage of the materials, and forward the materials to the customers of the said two companies. The appellant also assisted the personnel of TISCO in conducting stock verification of the goods lying in the godown and undertook the work of cutting and bending steel products of TISCO - The appellant is clearly guilty of approbation and reprobation. The appellant voluntarily registered itself under the Central Excise Act, which indicates that the appellant admitted that the remuneration received from TISCO and TRL was amenable to service tax under the Central Excise Act. The purpose of the registration would be rendered meaningless if it did not include the period of services provided by the appellant from September 1999 onwards. The appellant also made payments towards past service tax dues, which established the jural relationship between the appellant and the revenue authority with regard to 'Clearing and Forwarding' services provided by the appellant to the said two companies. The appellant fulfilled all the criteria of a Clearing and Forwarding agent as enumerated in the decision in Coal Handlers (P) Ltd. v. CCE - The appellant provided Clearing and Forwarding services to TISCO and TRL – The revenue authority shall raise a fresh demand of service tax for the clearing and forwarding services upon the appellant. There shall be a simple interest of 10% per annum on the consolidated amount of the service tax to be paid by the appellant under the tax bracket of 'Clearing and Forwarding services' – The appeal is disposed of - Whether the High Court has the jurisdiction to entertain the appeal under Section 35G of the Central Excise Act, 1944 - HELD - The scope of Section 35G excludes appeals where the rate of excise duty or the value of goods to be taxed is at issue. In the present case, the Court is not concerned with the rate of service tax or the value of the services provided by the appellant. The issues involved will not have a pan-India effect, and the Court is called upon to decide the questions of law arising from the admitted facts on the record. The key lies in the words "for purposes of assessment" in Section 35G, and the phrase "relation to" must be read as meaning a direct and proximate relationship to the rate of duty and to the value of goods for the purposes of assessment. Since the present case does not involve such a situation, the High Court has the jurisdiction to entertain the appeal under Section 35G – Ordered accordingly - Whether the claim of service tax is barred by limitation under Section 73 of the Finance Act, 1994 - The show cause notice for the claim of service tax was issued on September 13, 2004, for the period starting from September 1999. The appellant argued that the claim is barred by limitation under Section 73 of the Finance Act, 1994 - HELD - The cause of action for the show-cause notice dated September 13, 2004, stood revived on January 29, 2004, when the appellant made payments towards the past service tax dues. Applying the principle of acknowledgment of debt under Section 18 of the Limitation Act, 1936, the said payments renewed the cause of action - The appellant is covered by the provisions of Section 73(4A) of the Finance Act, 1994, which was applicable at the time of the payment made by the appellant. Under Section 73(4A), the revenue authority had five years from the relevant date, which was the date of the payment made by the appellant, to raise the claim of service tax. The appellant had consciously omitted to file its returns under Section 70, and the revenue authority did not have any information from the appellant regarding its business transactions with TISCO and TRL from September 1999 to April 2002, when the search and seizure operation was conducted. Therefore, the limitation period of five years applies to the claim of service tax against the appellant - Whether the imposition of penalty on the appellant is justified - HELD - The appellant shall pay a penalty at the rate of 15% of the service tax amount. The appellant had voluntarily registered itself under the Central Excise Act after the search and seizure operation conducted by the revenue authority, which persuaded the Court to lean in favor of a reduction of the penalty. However, the deliberate omission of the appellant to pay the service tax from the period September 1999, warranted the imposition of a penalty. The Court directed the revenue authority to raise a fresh demand for the service tax, interest, and the penalty within seven days from the date of the pronouncement of the judgment.
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