The National Litigation Policy of India mandates a strategic approach to legal appeals, stipulating that appeals should not be pursued when the monetary amount involved is below a specified threshold set by Revenue Authorities. It also discourages appeals in cases where precedents from Tribunals and High Courts have settled the matter without further contestation in the Supreme Court.
In a significant move, the GST Council, during its 53rd meeting held in New Delhi on June 22, 2024, introduced several measures aimed at simplifying compliance procedures for taxpayers. These recommendations included steps to facilitate trade and reduce the burden of litigation.
A pivotal recommendation by the Council involves setting monetary thresholds for filing appeals in GST cases by the department before the GST Appellate Tribunal, High Courts, and the Supreme Court. The monetary limits recommended are as follows:
GST Appellate Tribunal (GSTAT): Rs. 20 lakhs
High Court: Rs. 1 crore
Supreme Court: Rs. 2 crores
Following these recommendations, the Central Board of Indirect Taxes and Customs (CBIC) issued Circular No. 207/1/2024-GST on June 26, 2024, providing clarifications on reducing government litigation by fixing monetary limits for filing appeals or applications by the Department before GSTAT, High Courts, and the Supreme Court.
Non-Filing of Appeals Under Section 120
Section 120 of the CGST Act 2017 empowers the CBIC to issue orders, instructions, or directions fixing monetary limits to regulate the filing of appeals or applications by Central Tax Officers. When an Officer refrains from filing an appeal or application due to such directions, it does not prevent them from filing in other cases involving similar issues or questions of law. Importantly, the non-filing in one case cannot be interpreted as consent to the decision on the disputed issue.
Key Points from CBIC Circular No. 207/2024
The CBIC has exercised its powers under Section 120 of the CGST Act to establish the following monetary limits below which appeals or applications shall not be filed by Central Tax Officers:
Appellate Forum and Monetary Limit
GST Appellate Tribunal (GSTAT): Rs. 20 lakhs
High Court: Rs. 1 crore
Supreme Court: Rs. 2 crores
These thresholds apply to appeals or applications, including Special Leave Petitions (SLPs), under any provision of the CGST Act.
Principles for Non-Filing of Appeals
The following principles are to be observed to determine if a case falls within the monetary limits for non-filing of appeals:
- Only the aggregate amount of tax in dispute is considered (excluding interest and penalties).
- The monetary limit covers all types of GST (CGST, SGST, UGST, IGST) and Compensation Cess.
- Disputes solely involving interest, penalty, or late fees are assessed based on the amount of interest, penalty, or late fee.
- In cases of erroneous refunds, the disputed refund amount is considered.
- The monetary limit applies to the disputed amount only, excluding any admitted amounts.
- For composite orders disposing of multiple appeals or notices, the monetary limit applies to the total amount involved.
Exceptional Situations
Threshold limits do not apply in certain exceptional circumstances where decisions are based on merits rather than monetary limits. These include cases where:
- A provision is deemed ultra vires to the Constitution of India.
- A rule or regulation is deemed ultra vires to the parent Act.
- An order, notification, instruction, or circular is deemed ultra vires to the Act or Rules.
- Matters related to the valuation of goods or services, classification, refunds, place of supply, or other issues that are recurring, involve interpretation, or where adverse comments or costs have been imposed against the government.
Deciding to File Appeals
Even when the amount involved exceeds the prescribed monetary limit, appeals are to be decided on merits. The objective is to reduce unnecessary litigation and provide certainty to taxpayers regarding tax assessments.
Precedent Value
Judgments against which appeals are not filed due to monetary limits will not hold precedent value. The reviewing authority must record that although the decision is not acceptable, no appeal is filed because the amount involved is below the monetary limit set by the Board. This non-filing does not result in ‘attaining finality’ on an issue and does not prevent filing appeals in other cases with similar issues exceeding the monetary limit. Appeals may also be filed in cases involving questions of law.
Conclusion
The recent CBIC clarification offers comprehensive guidance on applying monetary limits in GST appeals. However, the scope for applying these limits is limited by numerous exceptions, including issues of valuation, classification, place of supply, refunds, recurring issues, interpretation issues, and validity of provisions. Notably, these areas have been major sources of disputes in the GST regime. The emphasis remains on reducing unnecessary litigation while ensuring justice and revenue interests are upheld.
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