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Fork in the Road: The Curious Case of Bifurcated Jurisdiction in Indirect Tax Appellate Structure

Jurisdiction in Indirect Tax Appellate Structure


Introduction

Justice dispensation system envisages a formal structure of adjudication, appeal, review, revision, etc. to ensure probity and fair balance in the mechanism for determination of rights and liabilities of the parties. It is, thus, necessary that the justice dispensation system provides seamless mechanism to the parties concerned to be able to identify the forum where they should ventilate their grievances and seek enforcement of rights. To this end, the statutory provisions unreservedly identify the adjudicating authority, the appellate forums, etc. The attendant procedures and conditionalities to be observed by such forums are also set out in the statute itself. There is no difference in this generic statutory scheme in the fiscal context with taxing statutes providing similarly.

There is a peculiarity, however, in the appellate structure under the key indirect tax laws. They appear to follow a scheme of bifurcated jurisdiction wherein instead of providing a seamless appellate route the appellate jurisdiction is bifurcated into different forums, so much so that appeals against one forums vest with different forums. Even though this scheme has been prevailing for decades, experience reveals that such bifurcation results into unavoidable confusion amongst the litigants, as regards identification of the appellate forums. It also adds further burden on the already strained judicial dispensation system by requiring the courts to test the maintainability for each appeal specifically and individually. This article sketches the statutory appellate scheme under the key indirect tax laws, which provide for such bifurcated jurisdiction and encapsulates the attendant consequences of the scheme.

Appellate structure under customs law

The Customs Act was enacted in 1962. It was enacted contemporaneous to the Income Tax Act, 1961. The latter provides for an appellate structure, wherein appeals from first appellate authority lie before the Appellate Tribunal,1 against whose orders any appeal lies before the High Court2 without any direct appeal to the Supreme Court. While the Customs Act follows a similar scheme and envisages an Appellate Tribunal and High Court as appellate authorities, it neither vests exclusive appellate jurisdiction against orders of lower appellate authorities to the Appellate Tribunal, nor vests exclusive appellate jurisdiction against orders of Appellate Tribunal to the High Court.

Under the Customs Act, the Appellate Tribunal ordinarily hears appeals against appellate authorities but does not have jurisdiction in cases involving goods imported or exported as baggage, drawback, etc.,3 and instead such cases, against orders passed by appellate authority, lie before the Central Government by way of “revision”.4 As a consequence of this bifurcation of appellate jurisdiction between the Appellate Tribunal and the revisionary authority, often the lis has revolved around maintainability,5 delay in approaching the correct appellate forums,6 inter se conflict as to which forum would consider a mixed lis,7 etc. which claim precious judicial time. The irony is that the confusion is not just amongst the taxpayers but also the tax officers who often pursue the remedy before wrong forums despite the expectation that they would be more familiar with the statutory provisions they are entrusted to man.8 Given that the Appellate Tribunal considers and adjudicates all substantive and procedural aspects relating to customs law, there appears no substantive reason to maintain a distinct forum only for a limited specie of disputes. Nonetheless, this scheme continues unabated.

Furthermore, the customs law does not provide for any further appellate review of the revision undertaken by the Central Government. However, the orders of the Appellate Tribunal are subject to further appeal, albeit with a caveat; appeal against certain orders of Appellate Tribunal lies directly before the Supreme Court9 whereas appeals against all other orders of Appellate Tribunal lie before the High Court10. The criterion for bifurcation under the statutory prescription is whether the order of the Appellate Tribunal relates “among other things, to the determination of any question having a relation to the rate of duty of customs or to the value of goods for the purposes of assessment”; such cases being under the exclusive appellate jurisdiction of the Supreme Court. Ordinarily these expressions would convey an impression that the line of distinction under the law is clear. However, the judicial construction of these expressions reveals otherwise.

The decision in Chemicals Mfg. and Trading Co. Ltd. v. Collector of Customs11 is the leading judgment of the Supreme Court illuminating the meaning of these expressions under the Customs Act. In this case the Supreme Court laid down the following test to determine the competing jurisdictions basis the statutory prescription:

11. … Questions relating to the rate of duty and to the value of goods for purposes of assessment are questions that squarely fall within the meaning of the said expression. A dispute as to the classification of goods and as to whether or not they are covered by an exemption notification relates directly and proximately to the rate of duty applicable thereto for purposes of assessment. Whether the value of goods for purposes of assessment is required to be increased or decreased is a question that relates directly and proximately to the value of goods for purposes of assessment. The statutory definition of the said expression indicates that it has to be read to limit its application to cases where, for the purposes of assessment, questions arise directly and proximately as to the rate of duty or the value of the goods.”

Ordinarily one would perceive the aforesaid said as illuminative, providing a clear guidance as to the choice of forum. However, subsequent decisions of the Supreme Court, called upon to apply the aforesaid test, have revealed that the test is not conclusive for the appeal to be maintainable before the Supreme Court. In SAIL v. Directorate General of Anti-Dumping and Allied Duties12 the Supreme Court added further conditions for the appeal to be maintainable before the Supreme Court.

18. Section 130-E(b) of the Act provides for a direct appeal to the Supreme Court against an order of the Appellate Tribunal, broadly speaking, on a question involving government revenue. This seems to be in view of the fact that the order that would be under appeal (i.e. order of the Appellate Tribunal) may go beyond the inter se dispute between the parties and effect upon a large number of assessees. The issue, in such an [appeal] surely will be one of general/public importance. Alternatively, the question raised or arising may require interpretation of the provisions of the Constitution. Such interpretation may involve a fresh or a relook or even an attempt to understand the true and correct purport of a laid down meaning of the constitutional provisions that may come into focus in a given case. It is only such questions of importance, alone, that are required to be decided by the Supreme Court and by the very nature of the questions raised or arising, the same necessarily have to involve issues of law going beyond the inter partes rights and extending to a class or category of assessees as a whole. This is the limitation that has to be understood to be inbuilt in Section 130-E(b) of the Act which, in our considered view, would also be consistent with the role and jurisdiction of the Supreme Court of India as envisaged under the Constitution. Viewed from the aforesaid perspective, the jurisdiction of the Supreme Court under Section 130-E(b) of the Act or the pari materia provisions of any other statute would be in harmony with those contained in Chapter IV of Part V of the Constitution.”

Thus, the Supreme Court added further conditions for an appeal against an order of the Appellate Tribunal to be maintainable before it. This aspect was thereafter addressed by the Supreme Court in Commr. of Customs v. Motorola India Ltd.13 wherein it concluded that despite the aforesaid test delineated in Navin Chemicals14, that “whether or not [the goods] are covered by an exemption notification relates directly and proximately to the rate of duty”, the appeal would not lie before the Supreme Court where the issue was concerned with interpretation of exemption notification. On this account the Supreme Court in Motorola India Ltd.15 observed inter alia as under:

19. Reverting to the present case, it could clearly be seen that the only question that is involved is whether the assessee had violated the conditions of the exemption notification by not utilising the imported materials for manufacturing of the declared final product and was, therefore, liable for payment of duty, interest and penalty. Neither any question with regard to determination of rate of duty arises nor a question relating to valuation of goods for the purposes of assessment arises in the present case. The appeals also do not involve determination of any question relating to the classification of goods, nor do they involve the question as to whether they are covered by the exemption notification or not. Undisputedly, the goods are covered by the said notification. The only question is as to whether the assessee has breached the conditions which are imposed by the notification for getting exemption from payment of the customs duty or not. The appeals do not involve any question of law of general public importance which would be applicable to a class or category of assessees as a whole. The question is purely inter se between the parties and is required to be adjudicated upon the facts available.”

The aforesaid reveals that the Supreme Court has cast a distinction between availability of an exemption notification versus interpretation of conditions of an exemption notification. There are two aspects emerging from this observation. First, according to the Supreme Court whether the taxpayer has violated the conditions of the exemption notification is not a situation which is envisaged, as one meant for direct appeal to Supreme Court, and second that in any case such a situation would not involve any question of law of general public importance which would be applicable to a class or category of taxpayers as a whole which requires the Supreme Court to advert to the lis, meaning thereby there is no warrant for such a lis to lie before the Supreme Court. With respect, both these conclusions are erroneous and require a revisit.

On the first count, a case which requires determination of the issue whether the taxpayer has violated the conditions of the exemption notification is nothing but a determination of the issue whether the taxpayer is entitled to the benefit of exemption notification. This is obvious because, if the taxpayer fails to satisfy the conditions of an exemption notification, then automatically the exemption is taken away and thus, the rate of customs duty will change. In such event, the situation falls directly within the test laid out in Navin Chemicals16 decision. Even otherwise, it is nit-picking and a hair-splitting exercise to determine whether a case involves interpretation of exemption notification versus interpretation of conditions of exemption notification, which only adds to the confusion as to whether the appeal from the Appellate Tribunal should lie before the Supreme Court or before the High Court.17 The subsequent decision of the Supreme Court in Asean Cableship Pte. Ltd. v. Commr. of Customs18 confirms this aspect insofar as the following observations were made therein:

12. While considering the aforesaid issue the main controversy and/or the principal question is required to be addressed. It was/is the case on behalf of the petitioner that the vessel AE being a foreign-going vessel the imported stores are eligible to the exemption under Section 87 of the Act. Therefore, the principal question/issue is the exemption claimed under Section 87 of the Act. Whether the assessee is entitled to exemption as claimed or not, such an issue cannot be said to be an issue relating, amongst other things, to the determination of any question having relation to the rate of duty. The submission on behalf of the petitioner that the duty will be nil and if not, which is the case of the Customs Department, it will be the applicable rate of duty and therefore, such a dispute can be said to be in relation to the rate of duty, has no substance. The dispute with respect to the exemption claimed and the dispute with regard to the rate of duty are both different, distinct and mutually exclusive. We are of the firm opinion that the dispute concerning an exemption cannot be equated with a dispute in relation to the rate of duty.”

It is difficult to appreciate the reasoning, or rather the lack of it, in the decision insofar as there is no reason assigned to reject the contention of the taxpayer. Indeed, it is a valid contention, at least prime facie, if not conclusively, that availability (or denial) of exemption indeed has a bearing on the rate of duty to be levied. The sole finding in the aforesaid observations to reject the taxpayer’s contention is that “[t]he dispute with respect to the exemption claimed and the dispute with regard to the rate of duty are both different, distinct and mutually exclusive”. However, there is no basis for this conclusion as both have an intertwined existence. In any case, this finding in Asean Cableship19 is contrary to the categorical affirmation in Navin Chemicals20 that availability of an “exemption notification relates directly and proximately to the rate of duty” and the decision in Navin Chemicals21 has attained the status of locus classicus, being quoted with approval in every single decision of the Supreme Court on the subject since the two decades of its pronouncement. This reveals, with respect, there is a head-on conflict between the law declared in Navin Chemicals22 and Asean Cableship23 which requires reconciliation or else the disputes regarding the correct forum of appeal against orders of Appellate Tribunal will continue to linger.

As the law stands today, in view of the decisions in Motorola India24 and Asean Cableship25, availability of exemption (and interpretation of conditions of exemption notification) is not a question which relates to the expression “rate of duty” which is the statutory test under the Customs Act. One may continue to wonder that if the availability (or non-availability) of exemption is relevant to determine what is the rate of duty on which a taxpayer should pay tax on the goods, on what premise the Supreme Court has concluded that availability of exemption is not a question which relates to the expression “rate of duty”. Nonetheless, this is the current legal position.

On the second account as well, it is submitted that test of the Supreme Court needs to be revisited insofar as it holds that the Supreme Court would only adjudicate appeals against orders of the Appellate Tribunal which involve question of law of general public importance which would be applicable to a class or category of taxpayers. This test implies that even though appeal is statutorily maintainable, the Supreme Court would not examine the correctness of the order of the Appellate Tribunal. In effect, the application of this test implies that while the Supreme Court would not carry out the review to ascertain the correctness of the order of the Appellate Tribunal, simultaneously the High Court is also precluded from examining the correctness of the order of the Appellate Tribunal in view of the statutory limitation on the High Court’s jurisdiction. In other words, a large number of orders of the Appellate Tribunal which relate “among other things, to the determination of any question having a relation to the rate of duty of customs or to the value of goods for the purposes of assessment” would escape appellate review altogether, translating the Appellate Tribunal as the final forum in such matters. Clearly this could not have been the legislative intent.

In this respect it is interesting to note that while the provision relating to appeal before High Court requires that for an appeal to be maintainable before it, the High Court must be “satisfied that the case involves a substantial question of law”26, there is no such qualification in context of the provision relating to direct appeal before the Supreme Court from an order of the Appellate Tribunal. The fact that the test of “substantial question of law” is conspicuously missing in the statutory provision relating to appeal to the Supreme Court is clearly indicative of the legislative intent that the Parliament did not intend restriction on the jurisdiction of the Supreme Court on such parameter. Instead, as evident from a plain reading of the statutory provision, the Parliament envisaged that the mere fact of the case involving “determination of any question having a relation to the rate of duty of customs or to the value of goods for the purposes of assessment” was sufficient for a direct appeal to the Supreme Court. To illustrate, there are other examples wherein “substantial question of law” is not a necessary prerequisite for appeal to Supreme Court. For illustration, Section 62 of the Insolvency and Bankruptcy Code, 2016 permits appeal to Supreme Court on a mere “question of law”. In fact, Section 125 of the Electricity Act, 2003 permits an appeal to the Supreme Court against “any decision or order of the Appellate Tribunal”. However, the decisions in SAIL27 and Motorola India28 have read this limitation in its appellate jurisdiction under the customs law, thereby limiting the scope of the appellate remedy and depriving the parties of a valuable right of appeal against orders of the Appellate Tribunal even though there is no such generic and overriding mandate under the appellate jurisdiction of the Supreme Court under other laws.

To conclude on this aspect, at any rate, the fluctuating legal position summarised in the aforesaid discussion reveals that determining whether to appeal before the High Court or before the Supreme Court against an order of the Appellate Tribunal under the customs law is not a question with a straightforward answer and instead is one with a rather complex determination.

Appellate structure under central excise and service tax law

With the introduction of the goods and services tax (GST) laws, a number of indirect tax legislations have stand subsumed therein. For illustration, the Finance Act, 1994 – which provided for levy of service tax – has been repealed by the Central Goods and Services Tax Act, 2017 (CGST Act).29 Furthermore, the scope of Central Excise Act, 1944 – which provides for levy of central excise duty on manufacture of goods – has been substantially pruned by the CGST Act.30 Nonetheless it is expedient to examine the appellate structure under the central excise and service tax law as they exemplify the hypothesis of this article.

The peculiar scheme under the customs law of bifurcating the jurisdiction to consider challenge from orders of first appellate authority extended even in the central excise law and service tax law. Similar to customs law, while the appeal against orders of the appellate authority laid before the Appellate Tribunal under the central excise law31 the lis against orders relating to loss of goods; rebate of duty of excise, etc. laid before the Central Government by way of “revision”.32 The same scheme was followed in service tax law.33 The consequential issues arising out of this bifurcation arose even in central excise law and service tax law, similar to those detailed earlier in the context of customs law. To highlight another absurdity in bifurcation, disputes relating to “refund” lie before the Appellate Tribunal whereas those relating to “rebate” lie before the Central Government by way of revision, even though pragmatically there is no difference between refund and rebate. Nonetheless, this odd bifurcation in the appellate hierarchy prevailed under the central excise and service tax laws.

The anomalous situation was similar in the context of appellate structure vis-à-vis orders of the Appellate Tribunals. Similar to the customs law, the central excise law provided for appeal to High Court against all orders of Appellate Tribunal other than “an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for the purposes of assessment”34, in which case the appeal would lie to the Supreme Court directly from the order of the Appellate Tribunal.35 Similar scheme prevailed under the service tax law.36

The consequences of this bifurcated jurisdiction were evident in the various judgments rendered by the High Court rejecting the appeals only on ground of maintainability, that too with most appeals of the Tax Department being rejected.37 In two detailed judgments the legal position was explained by the High Courts, interestingly, in both the matters the appeals were filed by the tax authorities which were rejected on ground of maintainability.

The Karnataka High Court in CST v. Scott Wilson Kirkpatrick (I) (P) Ltd.38 explained the underlying rationale for the bifurcated jurisdiction in the following terms:

“The intention behind this bifurcation of jurisdiction between the Supreme Court and the High Court seems to be that more often than not, any decision on these aforesaid aspects not only affects the interest of the parties rendering services who are parties to a dispute, but also to the parties rendering those services throughout the country. In a country governed by parliamentary legislation because of the territorial bifurcation in forming States and because of the divergent opinion which is possible, the service tax payable would vary from place to place. In order to bring uniformity in the levy of service tax throughout the country and consequently to see that the country’s finance is not affected, the Parliament has vested the jurisdiction to decide the disputes with the Supreme Court. Therefore, we see a policy underlining this bifurcation of the jurisdiction between the Supreme Court and the High Courts. All other matters other than what is set out above, which relates to the individual service providers and all disputes based on assessment orders which have attained finality, such as the benefits to which they are entitled to refunds, duty drawbacks, rebates, etc., which relate to a particular manufacturer falls within the jurisdiction of the High Courts. In other words, all disputes emanating from the orders determining the rate of service tax and value of service, which has reached finality are to be determined by the High Court and not disputes arising prior to the stage of determining the rate of service tax and value of service.”

The other decision is of the Delhi High Court in CST v. Ernst & Young (P) Ltd.39 In this case the High Court did not explore the rationale of the bifurcation and instead focused on the consequences of the failure to maintain the statutory scheme. On such account and upon appreciation of the other decisions on the subject, the High Court concluded as under:

17. … Determination of any question relating to rate of tax would necessarily directly and proximately involve the question, whether activity falls within the charging section and service tax is leviable on the said activity. The said determination is integral and an important injunct to the question of rate of tax. In case service tax is not to be levied or imposed and cannot be imposed under the charging section, no tax would be payable. The said determination would be direct or proximate to the issue of rate of tax, which will include nil tax, when no tax is chargeable.

18. If the reasoning given by the Revenue is to be accepted, it will lead to anomaly and substantial confusion. All assessments necessarily have to determine and decide the rate of tax after determining and deciding whether or not activity is chargeable or tax can be levied. Assessments against the assessee would decide the rate of tax applicable once it is held that the activity is chargeable to tax under the Finance Act. The words ‘rate of tax’ in relation to rate of tax would include the question whether or not the activity is exigible to tax under a particular or specific provision. This will be a reasonable and appropriate interpretation and will not cause or result in confusion or ambiguity regarding the appellate forum. Line between exigibility and rate of tax as propounded can be rather thin and superfluous in the present statutory context.”

Thus, clearly, the High Courts were alive and cognizant to the aspect that the test for distinguishing between the jurisdiction of the High Court and the Supreme Court was not a clear one and required detailed elaboration but nonetheless they were required to be traversed and applied in view of the legislative scheme. This resulted into a subsequent amendment in the law, wherein it was specifically clarified that “the determination of any question having a relation to the rate of duty shall include the determination of taxability or excisability of goods for the purpose of assessment”.40 In other words, the legislature clarified to make its intent manifest that the issue of taxability was necessarily a question relating to rate of duty and hence, the appeals could only be considered by the Supreme Court. The irony is that despite such legislative provision, that too which was introduced by way of amendment to clarify the legal position, the Supreme Court has continued to direct the High Court to adjudicate such matters.41 Thus, one is left aghast wondering where to draw the line vis-à-vis the respective appellate jurisdictions of the High Court and the Supreme Court.

Appellate structure under GST laws

The aforesaid discussion clearly reveals the pitfalls of the scheme of bifurcated jurisdiction under the indirect tax laws. Thus, one would have hoped that the lawmakers would revisit the approach and envisage an appellate structure which clearly delineates the appellate forums. The hope has, however, been belied. Notwithstanding that the enactment of the GST regime has been a major reform in indirect tax, the scheme of bifurcated jurisdiction has been continued even therein.

The CGST Act envisages an Appellate Tribunal with a Principal Bench and State Benches.42 While there appears to be no difference in terms of the jurisdiction of the Principal Bench and State Benches of the Appellate Tribunal, it is provided that “the cases in which any one of the issues involved relates to the place of supply, shall be heard only by the Principal Bench”.43 The scope of “place of supply” under GST laws is an extensive area.44 Thus, there is a bifurcation within the scope of the jurisdiction of the Principal Bench and State Benches of the Appellate Tribunal. It is noteworthy that under this statutory scheme it is not just those cases which exclusively involve place of supply which would lie before the Principal Bench. On the contrary, even if in a given case “any one of the issues involved relates to the place of supply” then also the jurisdiction of the State Benches of the Appellate Tribunal is ousted in favour of the Principal Bench. The rationale for this bifurcation of jurisdiction of the Appellate Tribunal amongst the Benches is not evident under the statutory scheme. It is also premature to draw interference from this legislative scheme, given that the Appellate Tribunal is yet to commence operations. Nonetheless, one cannot rule out with fortitude that there would be no confusion or logistic issues from this scheme. Questions may arise, for instance, where place of supply is only a minor and inconsequential issue, whether the State Benches can claim jurisdiction over such matters? One would hope to the contrary and expect a seamless jurisdictional interface between the various Benches of the Appellate Tribunal.

Another instance of bifurcated jurisdiction under the GST laws is regarding the appeals from the orders of the Appellate Tribunal. The CGST Act provides for an appeal to High Court against the orders of State Benches.45 Simultaneously it provides for direct appeal to Supreme Court against the orders of the Principal Bench of the Appellate Tribunal.46 Thus, the GST laws continue to maintain the dichotomy of appeals against orders of Appellate Tribunal being bifurcated between the High Court and Supreme Court. Having said that, unlike the scheme under customs law, central excise law and service tax law, the bifurcation of jurisdiction under the GST laws, between the High Court and Supreme Court is not “issue based” and is instead “forum based”. Thus, one would hope that the scope for confusion under the appellate scheme of GST laws is less in comparison to the appellate scheme under customs law, central excise law and service tax law. The functioning of the appellate mechanism over time will validate (or fail) this hope. Thus, it is expedient to let the issue rest for the present.

Having said that, one fails to decipher the underlying logic of the bifurcation and looking for an explanation is like a shot in the dark. Is the legislative intended to subject the determination of place of supply issues (which are exclusive to the Principal Bench of the Appellate Tribunal) to the sole adjudication by the Supreme Court? If the answer is yes, it perhaps justifies why appeal from orders of Principal Bench of the Appellate Tribunal would lie directly before the Supreme Court. However, as discussed above, the Principal Bench of the Appellate Tribunal does not hear only place of supply issues and thus, pragmatically, appeal even in those matters would liebefore the Supreme Court where place of supply is an incidental issue, or where no place of supply issue is involved. Thus, it is difficult to precisely ascertain the underlying legislative intent for continuing with bifurcated jurisdiction in the GST law.

Conclusion

The discussion in the foregoing parts clearly brings to fore the dichotomy and ramifications of the scheme of bifurcated jurisdiction under the indirect tax appellate structure. One cannot wish away the development of the law in the context of the customs law and other erstwhile laws. However, continuing with the scheme of bifurcated jurisdiction, despite decades of judicial opinion revealing the unsettled swing of the pendulum on this account, it is baffling to note the continuation of this scheme in the GST context. If indeed there is merit in the underlying logic in the GST law, to subject certain issues for direction adjudication by the Supreme Court (to the exclusion of the High Court) from the orders of the Appellate Tribunal, there is contrary evidence from the appreciation of the appellate scheme under the income tax law. Therein, all orders of the Appellate Tribunal must mandatorily receive the scrutiny of the High Court and there is no direct appeal to the Supreme Court. In fact, the Appellate Tribunal under the income tax law is much older than the Appellate Tribunal under the indirect tax laws and predates independence. Hence, the experience of the working of the Appellate Tribunal under the income tax law does merit consideration, which does not reveal any overwhelming rationale for excluding the jurisdiction of the High Court on any issueand subjecting them for direct adjudication by the Supreme Court. Nonetheless, as things stand under the GST law, and if the experience of judicial construction of the appellate scheme under customs law, central excise law and service tax law is a guide, clearly the appellate structure under the GST law is up for a bumpy ride, thanks to the peculiar scheme of bifurcated jurisdiction therein.

FAQ’s

Q- What is the indirect tax structure in India?

A- Indirect tax includes value-added tax, service tax, goods and services tax, customs duty, etc.

Q- What is the Jurisdiction of GST Appellate Authority?

A- Jurisdiction of the Appellate Tribunal extends to all cases where an appeal has been filed against an order, decision of a lower authority under the GST laws.

Q- What is the Appellate structure under customs law?

A- Customs Act envisages an Appellate Tribunal and High Court as appellate authorities, it neither vests exclusive appellate jurisdiction against orders of lower appellate authorities to the Appellate Tribunal, nor vests exclusive appellate jurisdiction against orders of Appellate Tribunal to the High Court. The Appellate Tribunal does not have jurisdiction in cases involving goods imported or exported as baggage, drawback, etc., and such cases lie before the Central Government by way of revision.

Q- What are indirect taxes?

A- Indirect tax is the tax levied on the consumption of goods and services. It is not directly levied on the income of a person. Instead, it has to paid along with the price of goods or services bought by the seller.


† Advocate, Supreme Court of India; LLM (Taxation), London School of Economics.

1. Income Tax Act, 1961, S. 253.

2. Income Tax Act, 1961, S. 260-A.

3. Customs Act, 1962, S. 129-A(1).

4. Customs Act, 1962, S. 129-DD.

5. For illustration, see Syed Aizaz Ahmed v. Commr. of Customs, 2013 SCC OnLine CESTAT 2256 : (2013) 297 ELT 535; Payangadi Moidu Mohammed Ali v. Commr. of Customs, 2016 SCC OnLine CESTAT 2416 : (2017) 357 ELT 577; O.P. Gulati v. Collector of Customs, 1992 SCC OnLine CEGAT 115 : (1993) 66 ELT 97; Mohd. Ashraf v. Collector of Customs, 1992 SCC OnLine CEGAT 169 : (1992) 62 ELT 355; Kekinbhai J. Thakkar v. Collector of Customs, 1988 SCC OnLine CEGAT 572 : (1989) 39 ELT 64 (CESTAT); Sejai International Ltd. v. CCE, 2004 SCC OnLine CESTAT 981 : (2004) 175 ELT 201; Ashok Kumar v. Commr. of Customs and Central Excise, 1998 SCC OnLine CEGAT 1343 : (2000) 124 ELT 770; Anand Control Systems (P) Ltd., In re, (2012) 276 ELT 406 (GOI); etc.

6. For illustration, see Indian Oil Corpn. Ltd. v. Commr. of Customs, 2012 SCC OnLine CESTAT 3807 : (2013) 295 ELT 707; Lee and Muirhead (India) (P) Ltd. v. Collector of Customs, 1990 SCC OnLine CEGAT 190 : (1991) 52 ELT 156; DSC International Trading (P) Ltd., In re, (2020) 372 ELT 740 (GOI); Abicor Binzel Productions (India) (P) Ltd., In re, (2014) 314 ELT 833 (GOI); M.A. Exports, In re, (2019) 370 ELT 1489 (GOI); Carter Container Co. (P) Ltd., In re, (2016) 343 ELT 750 (GOI); Bhansali & Co., In re, (2012) 284 ELT 299 (GOI); Besco Co., In re, (2015) 328 ELT 760 (GOI); etc.

7. For illustration, see Ravi Technoforge (P) Ltd. v. Commr. of Customs, (2023) 4 CENTAX 378 (CESTAT) (not found). In this case the issue relating to maintainability was whether the Appellate Tribunal would have jurisdiction where the lis involved issue of both drawback and classification of goods. The Appellate Tribunal concluded that since classification was the main issue, it would have jurisdiction. To similar effect, see Combitic Global Caplet (P) Ltd., In re, (2014) 314 ELT 918 (GOI).

8. For illustration, see Commr. of Customs v. India Emporium, 2002 SCC OnLine CEGAT 2147 : (2002) 148 ELT 308; Commr. of Customs v. Manali Petrochemicals, (2006) 206 ELT 321 (CESTAT) – affirmed in Commr. of Customs v. Manali Petrochemicals Ltd., 2014 SCC OnLine Mad 11052 : (2015) 327 ELT 22, etc. (

9. Customs Act, 1962, S. 130-E.

10. Customs Act, 1962, S. 130.

11. (1993) 4 SCC 320, 326.

12. (2017) 13 SCC 1, 11. Besides referring to the judgment in Navin Chemicals Mfg. and Trading Co. Ltd. v. Collector of Customs, (1993) 4 SCC 320, this decision also refers to the judgment in Collector of Customs v. Swastic Woollens (P) Ltd., (1988) Supp SCC 796.

13. (2019) 9 SCC 563.

14. (1993) 4 SCC 320.

15. (2019) 9 SCC 563, 571.

16. (1993) 4 SCC 320.

17. To similar effect, see CCE, Customs and Service Tax v. Such Silk International Ltd., 2022 SCC OnLine SC 1747.

18. 2022 SCC OnLine SC 1640.

19. 2022 SCC OnLine SC 1640.

20. (1993) 4 SCC 320.

21. (1993) 4 SCC 320.

22. (1993) 4 SCC 320.

23. 2022 SCC OnLine SC 1640.

24. (2019) 9 SCC 563.

25. 2022 SCC OnLine SC 1640.

26. Customs Act, 1962, S. 130(1).

27. (2017) 13 SCC 1.

28. (2019) 9 SCC 563.

29. Central Goods and Services Tax Act, 2017, S. 173.

30. Central Goods and Services Tax Act, 2017, S. 174.

31. Central Excise Act, 1944, S. 35-B.

32. Central Excise Act, 1944, S. 35-EE.

33. In view of reference by incorporation of provisions of Central Excise Act, 1944 for purpose of service tax. See Finance Act, 1994, S. 83.

34. Central Excise Act, 1944, S. 35-G.

35. Central Excise Act, 1944, S. 35-L.

36. In view of reference by incorporation of provisions of Central Excise Act, 1944 for purpose of service tax. See Finance Act, 1994, S. 83.

37. For illustration, in context of central excise law, see Commr. of Customs and Central Excise v. Bharat Box Factory Ltd., 2008 SCC OnLine J&K 107 : (2008) 231 ELT 416; CCE v. Punjab Recorders Ltd., 2003 SCC OnLine P&H 1875 : (2004) 165 ELT 34; Sterlite Optical Technologies Ltd. v. CCE, 2007 SCC OnLine Bom 1435 : (2007) 213 ELT 658; CCE v. Shriram Refrigeration Industries, 2008 SCC OnLine AP 911 : (2009) 240 ELT 201; CCE v. Universal Ferro & Allied Chemicals Ltd., 2008 SCC OnLine Bom 1520 : (2009) 234 ELT 220. In context of service tax law, see CST v. Delhi Gymkhana Club Ltd., 2009 SCC OnLine Del 2629 : (2009) 16 STR 129; CST v. Bharti Airtel Ltd., 2013 SCC OnLine Del 801 : (2013) 30 STR 451, etc.

38. (2012) 1 AIR Kant R 621 : (2011) 23 STR 321.

39. 2014 SCC OnLine Del 7605 : (2014) 34 STR 3.

40. Central Excise Act, 1944, inserted by Finance (No. 2) Act, 2014, S. 35-L(2).

41. CCE v. Shriram Refrigeration Industries, 2022 SCC OnLine SC 1418.

42. Central Goods and Services Tax Act, 2017, as amended by Finance Act, 2023, S. 109(2).

43. Central Goods and Services Tax Act, 2017, as amended by Finance Act, 2023, S. 109(5).

44. See generally, Integrated Goods and Services Tax Act, 2017, Ch. V. It covers the following provisions; “10. Place of supply of goods other than supply of goods imported into, or exported from India; 11. Place of supply of goods imported into, or exported from India; 12. Place of supply of services where location of supplier and recipient is in India; 13. Place of supply of services where location of supplier or location of recipient is outside India; and 14. Special provision for payment of tax by a supplier of online information and database access or retrieval services (OIDAR) services.”

45. Central Goods and Services Tax Act, 2017, S. 117.

46. Central Goods and Services Tax Act, 2017, S. 118.

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