Service Tax Appeal Dismissed as Time-Barred Show Cause Notice Falls Outside Delhi HC Jurisdiction
The High Court directs Revenue to approach the Supreme Court in the service tax exemption dispute.
The Delhi High Court has dismissed an appeal filed by the Commissioner of Service Tax, Delhi-II, challenging an order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) that had ruled in favour of M/s Shyam Spectra Private Limited. The court held that the appeal was not maintainable before the High Court since the issue pertained to taxability and, under the law, such matters are to be heard by the Supreme Court.
The bench of Justice Prathiba M. Singh and Justice Rajneesh Kumar Gupta, observed that even if the Tribunal has only decided the issue on limitation, the nature of the original order involved taxability. In such cases, the statutory scheme under Section 35L requires an appeal to be filed before the Supreme Court, not the High Court.
The matter arose from a Show Cause Notice (SCN) issued alleging non-payment of service tax by Shyam Spectra for lease internet broadband services provided to exempt entities like Software Technology Parks of India (STPIs) and foreign embassies. The original order had demanded service tax of Rs. 3.13 crore with interest.
However, the CESTAT had quashed the demand in July 2024, ruling that the SCN was time-barred under Section 73(1) of the Finance Act, 1994, as there was no suppression of facts by the assessee.
The department appealed the order before the Delhi High Court, arguing that the Tribunal had erred in deciding the matter on limitation alone.
During the hearing, the assessee contended that since the issue ultimately involves taxability under a service tax exemption notification (Notification No. 4/2004-ST), the appeal should lie before the Supreme Court under Section 35L of the Central Excise Act, 1944. The High Court concurred with this view.
Relying on earlier judgments, including Commissioner of Service Tax v. Ernst & Young Pvt Ltd. and Commissioner of CGST v. SpiceJet Ltd., the Court reinforced the principle that the “nature of the order passed” determines appellate jurisdiction, not merely the grounds raised in the appeal.
The High Court clarified that the dismissal of the appeal would not preclude the Revenue from approaching the Supreme Court and seeking relief under the Limitation Act for the time spent in pursuing the matter in the wrong forum.
Case Details
Case Title: Commissioner Service Tax Versus Shyam Spectra Private Limited
Case No.: SERTA 5/2025
Date: 02/07/2025
Counsel For Petitioner: Atul Tripathi, SSC
Counsel For Respondent: J. K. Mittal
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.
