By TIOL News Service

CHENNAI, NOV 22, 2014: IT is not uncommon to see appeals filed before the High Courts under Section 35G getting dismissed for want of jurisdiction if the dispute relates to among other things, determination of rate of duty or value of the goods. But, in this case the High Court dismissed a Writ Petition by holding that the Court had no jurisdiction as the matter relates to determination of rate of tax.

The facts of the case are as follows. The Petitioner had received certain amounts from their Group Companies for allowing them to use the logo "TTK". Department held that these amounts are taxable under Intellectual Property Service as defined under Sec 65(55a) of the Finance Act, 1994. The Petitioner filed an appeal before the CESTAT against confirmed demand and against subsequent Show Cause Notice, filed a Writ Petition before the High Court. Consequent to the interim order passed by the High Court, the Petitioner withdrew the appeal from CESTAT with liberty to apply for restoration of appeal depending on the outcome of the Writ Petition.

After hearing both sides, the High Court held:

This Court is of the view that the petitioner having already agitated their rights before the Tribunal with regard to the earlier period was not entitled to maintain a Writ Petition before this Court, when show cause notice was issued for the subsequent period. That apart, the issue as to whether service tax is liable to be paid on the nature of transaction done by the petitioner with its group companies, whether the logo which is registered under the Copy Right Act was used as an 'artistic work' or merely with the purpose to show that the products marketed by their group companies also belong to the TTK group and whether in that regard, it was in the nature of a trade mark are all issues which involve adjudication of disputed questions of fact. These issues cannot be permitted to be raised for being adjudicated in a Writ Petition.

In the case of United Bleachers Ltd., vs. CEGAT, 2011-TIOL-253-HC-MAD-CX a similar issue arose as to whether a Writ Petition could be entertained without exhausting the alternate remedy, the contention raised by the petitioner therein was rejected and it was held that the Writ Petition was not maintainable on the ground that under Section 35G of the Central Excise Act, there is a specific embargo for this Court to entertain the appeal with regard to dispute relating to the determination of any question having a relation to the rate of duty of exercise or to the value of the goods for the purpose of assessment. The same principle would equally apply to the case on hand, the only difference being the present proceedings are under the Finance Act. The issue relating to rate of duty whether the transaction is amenable for taxation under the Finance Act are classification issues, which cannot be adjudicated by this Court by exercise of its power under Article 226 of the Constitution.

Thus, the High Court dismissed the Writ Petition as there is a clear bar of jurisdiction.

(See 2014-TIOL-2024-HC-MAD-ST)