In response to the 53rd GST Council’s directives, CBIC has issued Circular No. 207/1/2024-GST, outlining revised monetary thresholds for filing appeals in GST disputes. These thresholds, applicable across GSTAT, High Courts, and the Supreme Court, mark a strategic shift towards optimizing judicial resources and fostering prudent litigation practices. To Appeal or Not to Appeal: CBIC Sets Limits for GST Appeals by Department
Background
In pursuance of 53rd GST Council recommendations, the Central Board of Indirect Taxes and Customs (CBIC) has recently issued Circular No. 207/1/2024-GST dated 26-June-2024, setting up new monetary limits for the Department’s filing of appeals before the GST Appellate Tribunal (GSTAT), High Courts, and the Supreme Court. This move is aimed to minimize government litigation and enhance the efficiency of judicial resource allocation.
Objectives of government:
1. The aim is to optimum the utilization of judicial resources and expedite the resolution of pending cases.
2. It underscores the importance of prudent litigation practices by establishing thresholds for filing appeals in Revenue matters.
3. The appeals should not be pursued when the amount involved is below a specified monetary limit set by Revenue authorities.
4. Discourage filing appeals in cases where established precedents from Tribunals and High Courts have settled the matter and have not been contested in the Supreme Court.
Monetary Limits for Filing Appeals
| Judicial Body | Monetary Limit |
| GSTAT | ₹ 20,00,000 |
| High Court | ₹ 1,00,00,000 |
| Supreme Court | ₹ 2,00,00,000 |
Section 120 of the CGST Act empowers CBIC to fix the monetary limits for appeals by the authorities. It says as follows:
When GST officers can not appeal certain decisions.
1. The tax authority (Board) can set minimum amounts for appeals. This means if the tax issue involves a smaller amount, the tax office can’t appeal the decision.
2. If the tax office doesn’t appeal because of the limit, they can still appeal other cases with similar issues, even if the amounts are bigger.
3. Just because the tax office doesn’t appeal due to the limit, it doesn’t mean they agree with the decision.
4. If a case goes to court anyway, the judge will take into account why the tax office didn’t appeal in the first place (because of the limit).
Manner of Determination of monetary limits.
| Dispute type | Amount to consider for monetary limit |
| Demand of tax (with or without penalty and/or interest) | Total amount of tax in dispute (including CGST, SGST/UTGST, IGST and Compensation Cess) |
| Demand of interest only | Amount of interest only |
| Demand of penalty only | Amount of penalty only |
| Demand of late fee only | Amount of late fee only |
| Interest, penalty and/or late fee (without any disputed tax amount) | Total amount of interest, penalty and late fee |
| Erroneous refund | Amount of refund in dispute (including CGST, SGST/UTGST, IGST and Compensation Cess) |
Composite Orders: When a single order deals with multiple appeals or demand notices, the monetary limits for filing an appeal should be based on the total combined amount of tax, interest, penalty, or late fee from all the appeals or notices together, not just the amount from each individual appeal or notice.
Exceptions
The monetary limits for filing appeals or applications by the department do not apply in the following special cases. In these situations, decisions to file appeals will be based on the merits, regardless of the monetary limits:
1. Where any provision of the CGST Act, SGST/UTGST Act, IGST Act, or GST (Compensation to States) Act have been held to be unconstitutional.
2. Where any rules or regulations made under the CGST Act, SGST/UTGST Act, IGST Act, or GST (Compensation to States) Act have been held to be ultra vires the parent act.
3. Where any order, notification, instruction, or circular issued by the Government or the Board has been held to be ultra vires of the CGST Act, SGST/UTGST Act, IGST Act, or GST (Compensation to States) Act or the rules made under these acts.
4. Recurring Issues Involving Interpretation:
– Matters related to:
– Valuation of goods or services
– Classification of goods or services
– Refunds
– Place of supply
– Any other recurring issue involving interpretation of the Act, rules, notifications, circulars, or instructions.
5. If negative comments or costs have been imposed against the Government, Department, or their officers.
6. Any other case where the Board believes it is necessary to appeal in the interest of justice or revenue.
Circular notes following key points on filing appeals by authorities:
1. Appeals should not be filed just because the disputed tax amount is above the set monetary limits.
2. Decisions to appeal should be based on the merits of the case.
3. Officers should aim to reduce unnecessary litigation and provide clarity to taxpayers when deciding on filing an appeal.
4. Not filing an appeal due to monetary limits doesn’t restrict a tax officer from appealing in other cases with similar issues where the disputed tax exceeds the limit or involves questions of law.
5. Not filing an appeal due to monetary limits doesn’t mean the Department agrees with the decision.
6. If a taxpayer cites a previous order claiming Department acceptance, need to check if it was accepted only because of the monetary limit before using it as a precedent.
7. In cases where no appeal is filed due to monetary limits, GST Department representatives must inform GSTAT or the Court that the appeal was not filed solely because the disputed tax amount was below the limit.
Concluding Remarks:
Circular No. 207/1/2024-GST represents a proactive measure by CBIC to enhance the efficacy of the appeal process in GST disputes. By delineating transparent monetary limits and encouraging merit-based appeal decisions, the circular aims to strike a balance between judicial efficiency and taxpayer rights, ultimately benefiting both the government and stakeholders in the GST ecosystem.
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