The Supreme Court on Monday criticised the Central Goods and Services Tax and Central Excise department, Delhi South for filing an appeal against an order passed by its own Commissioner, which had been upheld at every stage of litigation [Commissioner CGST v. SpiceJet].
A Bench of Justices JB Pardiwala and R Mahadevan proceeded to dismiss the appeal, filed in a service tax dispute with SpiceJet.
"How can you file an appeal against your own commissioner's order? The CESTAT has also dismissed your appeal. Dismissed," the Court said.
The dispute stemmed from a show cause notice dated October 21, 2014, issued to SpiceJet on three issues:
Whether the airline had wrongly availed CENVAT credit of ₹21.55 crore for July 2010–March 2011 in violation of Rule 6(3A) of the CENVAT Credit Rules, 2004.
Whether service tax of ₹4.01 crore was leviable on excess baggage charges collected from passengers.
Whether the extended limitation period under Section 73(1) of the Finance Act, 1994 could be invoked to initiate proceedings for suppression of facts.
On March 31, 2016, the Commissioner of Service Tax ruled in favour of SpiceJet, holding that the CENVAT credit reversal demanded was not warranted, that no additional service tax was payable on excess baggage charges, and that the extended limitation period could not be invoked.
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) dismissed the department’s appeal on July 3, 2023, holding the show cause notice to be time-barred and, in effect, upholding the Commissioner’s substantive findings.
The Commissioner then approached the Delhi High Court under Section 35G of the Central Excise Act, 1944, framing the dispute as one of limitation.
On December 5, 2024, a Division Bench of Justices Prathiba M Singh and Amit Sharma dismissed the appeal as not maintainable, holding that since the Commissioner’s order also dealt with taxability and valuation issues, any appeal from the CESTAT order lay directly to the Supreme Court under Section 35L.
The High Court clarified that its dismissal would not prevent the appellant (GST authority) from approaching the Supreme Court and seeking exclusion of the time spent in the High Court under Section 14 of the Limitation Act, 1963.
The GST department subsequently appealed to the Supreme Court, which has now dismissed the challenge.
During the hearing, the Court questioned why the CGST department was pursuing an appeal against an order passed by its own adjudicating authority, especially when the order had been affirmed both by the CESTAT and the Delhi High Court.
The CGST authority was represented by Senior Advocate Arjit Prasad.
SpiceJet was represented by Advocate Charanya Lakshmikumaran from Lakshmikumaran & Sridharan