CBDT Circular specifying Tax effects for appeal filing applies even to pending matters

DIT Vs. S. R. M. B. Dairy Farming (P) Ltd. (Supreme Court)

In the present proceedings, we are concerned with the implementation of Instruction No. 3 of 2011 dated 9.2.2011, providing for appeals not to be filed before the High Court(s) where the tax impact was less than Rs. 10 lakh. It also contains certain other conditions which will be reverted to later, but suffice to say that this Instruction was in super session of the earlier Instruction No. 1979 of 2000 dated 27.3.2000 where the limit of the tax effect was Rs. 4 lakh. The Instruction/ Circular in question is stated to have a prospective effect as per the Revenue and, thus, cases which were pending in the High Court(s) and had been filed prior to the Instruction in question (Instruction No.3) but had tax effect of less than Rs. 10 lakh were, thus, required to be determined on their merits and not be dismissed by applying the circular/ instruction.

Held by SC: We are of the view that the matter needs to be put to rest and a clarity be obtained in view of the impact of this issue on pending cases before the High Courts as well as the cases which have been disposed of by various High Courts by applying the Circular of 2011 to pending litigations. In our view the matter has been squarely put to rest taking further care of the interest of the Revenue by the order passed by the three Judges Bench of this Court in Surya Herbal Ltd. case (supra), which had put two caveats even to the retrospective application of the Circular. The subsequent orders have been passed by the two Judges Bench without those orders being brought to the notice of the Court, a duty which was cast on the Department to have done so to avoid the ambiguity which has arisen. Thus, the said view of the three Judges Bench would hold water and the Circular would apply even to pending matters but subject to the two caveats provided in Surya Herbal Ltd. case (supra).

Full Text of the Supreme Court Judgment / Order is as follows:-

1. Leave granted.

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