Appeal Over Misclassification of Insurance Auxiliary Services Not Maintainable Before HC: Calcutta High Court
Disputes involving service classification and valuation are not maintainable under Section 35G; Rs. 4.72 crore tax demand falls below appeal threshold.
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The Calcutta High Court has dismissed an appeal filed by the Commissioner of Service Tax, now known as the Commissioner of CGST and CX, Kolkata South, against M/s Medicare Service (India) Pvt. Ltd., citing lack of jurisdiction in service classification disputes involving valuation and rate of duty.
The Bench of Chief Justice T.S. Sivagnanam and Justice Chaitali Chatterjee (Das), held that the appeal could not be entertained as it involved questions relating to service classification and assessment of value—subjects over which the High Court lacks jurisdiction under Section 35G.
The department had approached the High Court under Section 35G of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994, challenging an order dated July 30, 2024, passed by the Customs, Central Excise & Service Tax Appellate Tribunal (CESTAT), East Zonal Bench, Kolkata.
The core issue revolved around whether the activities of M/s Medicare Service (India) Pvt. Ltd., which included collection and remittance of insurance premiums via a club-like arrangement, qualified as “Insurance Auxiliary Services” under Section 65(55) of the Finance Act, 1994, thereby attracting service tax liability. The department alleged that the company acted as an intermediary without proper registration and documentation and wrongly availed CENVAT credit of over ₹4.10 crore during the period 2005–2008.
The Revenue raised multiple questions of law, including whether the company’s activities fall under the ambit of Insurance Auxiliary Services. Whether documents such as letters and certificates, rather than invoices from insurance companies, are sufficient to avail CENVAT credit. Alleged procedural irregularities, such as submission of new documents during appellate proceedings. Allegations of service tax evasion by amending registration details and misrepresenting the nature of services in ST-3 returns.
The Court also noted that though such matters could be escalated to the Supreme Court, the department could not do so in this case, as the disputed tax amount of Rs. 4.72 crore falls below the prescribed monetary threshold of Rs. 5 crore for appeal before the apex court.
The Court dismissed the appeal, leaving the substantial questions of law raised by the department open for future consideration.
Case Details
Case Title: Commissioner Of Service Tax Kolkata Presently Known As Commissioner Of Cgst And Cx, Kolkata South Co Vs M/S Medicare Service (India) Pvt Ltd
Case No.: CEXA/10/2025 IA NO: GA/1/2025
Date: 2nd July, 2025
Counsel For Petitioner: B. P. Banerjee
Counsel For Respondent: J. P. Khaitan, Sr. Adv.
Mariya is the Senior Editor at JurisHour. She has 5+ years of experience on covering tax litigation stories from the Supreme Court, High Courts and various tribunals including CESTAT, ITAT, NCLAT, NCLT, etc. Mariya graduated from MLSU Law College, Udaipur (Raj.) with B.A.LL.B. and also holds an LL.M. She started as a freelance tax reporter in the leading online legal news companies like LiveLaw & Taxscan.
