Revenue Appeal on Taxability Lies to Supreme Court, Not High Court: Delhi High Court

The Delhi High Court dismissed the Revenue’s appeal against a refund to Airport Retail as not maintainable, because the refund turned on taxability, which Section 35L sends to the Supreme Court.

The Delhi High Court has held that an appeal under Section 35G of the Central Excise Act, 1944 is not maintainable where the Tribunal’s order determines a question of taxability, because Section 35L(2) treats taxability as part of the rate of duty, against which an appeal lies only to the Supreme Court [Principal Commissioner CGST and CX Delhi (South) v. Airport Retail Private Limited, 2026-juristway.com-3414-HC(Delhi)-ST].

Justice Avneesh Jhingan wrote the order for a Bench with Justice Shail Jain. The respondent held a licence from Delhi International Airport Limited for space at Delhi Airport. It had earlier won a writ petition against service tax on rentals and royalties paid for that space, and on 16 Jul 2015 claimed a refund of ₹11,73,30,977. The refund was rejected on 8 Dec 2016 on the ground that the services were taxable after a retrospective amendment to Section 65(105)(zzzz) of the Finance Act, 1994. The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed the refund on 19 Aug 2025.

The Revenue’s proposed questions asked whether taxability was vitiated by citing the wrong sub‑clause and whether the refund was rightly allowed. On instructions, it argued that no issue of taxability arose, as the nature of the services was not disputed.

The Court found that argument misconceived. The order‑in‑original had rejected the refund precisely on taxability, the departmental representative pressed the same point before the CESTAT, and the questions in the appeal raised it again.

Section 35G(1) allows appeals to the High Court on substantial questions of law, except orders determining a question relating to the rate of duty or value for assessment. Section 35L(1)(b) sends such orders to the Supreme Court, and Section 35L(2) provides that rate of duty includes taxability or excisability for assessment. Though the dispute concerned a refund, its basis was taxability.

In view of the “unambiguous language” of Section 35L, the appeal was dismissed as not maintainable, with liberty to the Revenue to pursue remedies in accordance with law.

2026-juristway.com-3414-HC(Delhi)-ST