Commissioner of CGST And Central Excise Delhi South Vs Spicejet Ltd. (Delhi High Court)
Delhi High Court has dismissed an appeal filed by the Commissioner of CGST and Central Excise Delhi South against an order of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) dated July 3, 2023, concerning Spicejet Ltd. The High Court’s decision, delivered under Section 35G of the Central Excise Act, 1944, was primarily based on the determination of the correct appellate forum for the issues involved. The court held that the appeal should lie directly with the Supreme Court under Section 35L of the Act, rather than the High Court.
The original proceedings stemmed from a show cause notice issued on October 21, 2014, which was adjudicated by the Commissioner of Service Tax on March 31, 2016. This order addressed three key issues:
1. CENVAT Credit Allowability: Whether CENVAT credit was not allowable as per Rule 14 of the 2004 Credit Rules read with Section 11A of the Central Excise Act, 1944, and if penalty under Rule 15(3) was imposable for contravention of Rule 6(3A) of the 2004 Credit Rules.
2. Service Tax on Excess Baggage Charges: Whether service tax on excess baggage charges recovered from passengers should be leviable.
3. Invocation of Extended Period of Limitation: Whether Section 73(1) of the Finance Act was invokable for suppression of facts.
Commissioner’s Findings:
On the first issue concerning CENVAT credit, the Commissioner of Service Tax ruled in favor of Spicejet Ltd. The Commissioner noted that the assessee was correct in stating that the ratio of the previous year should not be used for reversing CENVAT credit for exempted services. Instead, reversal should be determined on an “actual basis” after the financial year-end (June 30), with adjustments made for any excess or shortage. The Commissioner also highlighted that as per Rule 6(3A)(g) of the CENVAT Credit Rules, 2004, the assessee had informed the department about the adjustment made on June 30, 2012, within the stipulated 15 days (on July 12, 2012). Consequently, the Commissioner concluded that the demand of Rs. 21.55 crores for excess CENVAT credit for the period July 2010 to March 2011 was “not tenable.”
Regarding the second issue of service tax on excess baggage charges, the excerpt provided from the judgment does not detail the Commissioner’s specific findings but directly jumps to the High Court’s decision on maintainability. However, other accessible information about this case indicates that the Commissioner had initially held that service tax was not leviable on excess baggage charges. The revenue had challenged this before CESTAT.
CESTAT’s Order:
The CESTAT, in its order dated July 3, 2023, primarily dismissed the revenue’s appeal on the grounds of limitation, holding that the show cause notice itself had not been issued within the prescribed period. This meant CESTAT did not delve into the substantive merits of the CENVAT credit or excess baggage issues.
Delhi High Court’s Examination of Maintainability:
The core of the Delhi High Court’s judgment revolved around the question of whether the appeal against CESTAT’s order was maintainable before the High Court under Section 35G or if it should directly go to the Supreme Court under Section 35L of the Central Excise Act, 1944 (which also applies to service tax matters). Section 35L specifies certain categories of cases where an appeal from CESTAT lies directly to the Supreme Court, typically involving questions related to the “determination of any question having relation to the rate of duty of excise or to the value of goods for purposes of assessment.” Correspondingly, for service tax matters, it would relate to the “rate of service tax or to the value of taxable service.”
The High Court referred to its own previous decision in Commissioner of CGST and Central Excise Delhi South v. M/s Haamid Real Estate Pvt Ltd. (SERTA 4/2025), which, in turn, heavily relied on the Spicejet Ltd. case itself (SERTA 2/2024).
