High Court Rules Classification Disputes Must Be Heard by the Supreme Court Under Section 35L
In a significant ruling, the Telangana High Court dismissed an appeal filed by the Principal Commissioner of Central Tax & Customs against M/s. Mars International India Pvt. Limited. The Court determined that the appeal, which pertained to the classification of services and taxability, was not maintainable under Section 35G of the Central Excise Act, 1944. Instead, such disputes must be adjudicated by the Supreme Court as per Section 35L of the Act.
The appeal was originally filed against a decision by the CESTAT, Hyderabad, which had overturned a demand and penalty imposed on M/s. Mars International. The Telangana High Court, comprising Justices P. Sam Koshy and Narsing Rao Nandikonda, highlighted that matters involving the classification of services directly relate to the determination of the rate of duty. Hence, they fall outside the jurisdiction of the High Court under Section 35G.
The Court referenced several precedents, including a recent Supreme Court ruling in Alupro Building System Pvt. Ltd. v. Commissioner of Central Excise, which emphasized that disputes relating to the rate of duty or taxability must be heard by the Supreme Court. The amendment in Section 35L by the Finance (No. 2) Act, 2014, was cited as clarifying this jurisdictional mandate.
The judgment serves as a crucial reminder of the jurisdictional boundaries concerning tax disputes in India, reinforcing the Supreme Court's role in adjudicating issues related to the rate of duty or taxability.
Bottom Line :
Appeal under Section 35G of the Central Excise Act is not maintainable when the dispute pertains to the classification of services, which directly relates to the determination of the rate of duty or taxability. Such matters fall under Section 35L of the Central Excise Act and must be adjudicated by the Supreme Court.
Statutory provision(s): Central Excise Act, 1944 Sections 35G, 35L
