The Supreme Court has pulled up the Central Goods and Services Tax (CGST) and Central Excise Department, Delhi South, for challenging an order issued by its own Commissioner — an order that had already been upheld at every stage of litigation.
A Bench of Justices JB Pardiwala and R Mahadevan dismissed the appeal in a long-standing service tax dispute with SpiceJet, remarking: “How can you file an appeal against your own Commissioner’s order? The CESTAT has also dismissed your appeal. Dismissed.”
The matter originated from a show cause notice dated October 21, 2014, issued to SpiceJet on three counts.
Firstly, alleged wrongful availment of CENVAT credit worth ₹21.55 crore between July 2010 and March 2011, purportedly in breach of Rule 6(3A) of the CENVAT Credit Rules, 2004.
Secondly, alleged non-payment of service tax of ₹4.01 crore on excess baggage charges collected from passengers.
Thirdly, invocation of the extended limitation period under Section 73(1) of the Finance Act, 1994 on grounds of suppression of facts.
On March 31, 2016, the Commissioner of Service Tax ruled entirely in favour of SpiceJet — finding no basis for CENVAT credit reversal, holding that excess baggage charges were not liable to additional service tax, and rejecting the invocation of the extended limitation period.
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) later upheld this decision on July 3, 2023, ruling that the show cause notice itself was time-barred and thereby endorsing the Commissioner’s findings.
Undeterred, the Commissioner approached the Delhi High Court under Section 35G of the Central Excise Act, 1944, framing the case as a dispute on limitation. However, on December 5, 2024, a Bench of Justices Prathiba M Singh and Amit Sharma dismissed the appeal as not maintainable, clarifying that since the Commissioner’s order addressed taxability and valuation issues, the appeal should have gone directly to the Supreme Court under Section 35L.
The High Court also noted that the GST authority could still approach the apex court and seek benefit under Section 14 of the Limitation Act, 1963 for the time spent in the wrong forum.
Following this, the department moved the Supreme Court — only to face another dismissal. The apex court expressed strong reservations over the department’s persistence in challenging its own adjudicating officer’s ruling, despite concurrent findings from both the CESTAT and the High Court.
