MONETARY LIMITS FOR GST LITIGATION (APPEALS)

[Dr. Sanjiv Agarwal]

The National Litigation Policy of India, it mandates that appeals should not be pursued when the amount involved is below a specified monetary limit set by Revenue Authorities. It also discourages 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.

Recently GST Council in its 53^rd meeting held at New Delhi on 22.06.2024 decided on / recommended various measures aiming to ease the compliances for taxpayers by making provisions and procedures simpler and less cumbersome. It also took steps for trade facilitation.

The Council, inter alia, recommended to prescribe monetary limits, subject to certain exclusions, for filing of appeals in GST by the department before GST Appellate Tribunal, High Court, and Supreme Court, to reduce government litigation. The following monetary limits have been recommended by the Council:

• GSTAT: Rs. 20 lakhs
• High Court: Rs. 1 crore
• Supreme Court: Rs. 2 crores

Based on recommendations of 53^rd meeting of GST Council held on 22.06.2024, CBIC has issued clarification vide Circular No. 207/1/2024-GST dated 26.06.2024 in relation to reduction of Government Litigation – fixing monetary limits for filing appeals or applications by the Department before GSTAT, High Courts and Supreme Court.

Not filing of Appeals (Section 120)

Section 120 of the CGST Act 2017 provides for non-filing of appeals in certain cases. It provides that based on orders/instructions/directions issued by Central Board of Indirect Taxes (CBIC) file on the recommendation of GST council in certain cases, appeals may not be required to be filed.

Accordingly,

1. 1. The Board may issue order or instructions or directions fixing monetary limits for the purpose of regulating the filing of appeal or application by Officer of central tax.
   2. In where the Officer has not filed an appeal/application against any decision/order in view of such order/instruction/directions, it shall not preclude him from filing appeal/application in any other cases involving same/similar issue or question of law.
   3. No party in appeal/application shall contend that the Officer has acquiesced (agreed/consented) in the decision on the disputed issue by not filing an appeal/application.
   4. The Appellate Tribunal or court, as the case may be hearing such appeal/ application shall have regard to the circumstances under which appeal/ application was not filed by the Officer in pursuance of such order/ instructions/directions.

Gist of CBIC Circular No. 207 dated 26.06.2024

Section 120 of the CGST Act, 2017 provides that appeals need not to be filed in certain cases:

CBIC has in exercise of said powers under section 120 of the CGST Act has fixed following monetary limits below which appeal or application or Special Leave Petition, as the case may be, shall not be filed by the Central Tax Officers.

Monetary Limits

The monetary limits prescribed by CBIC shall be as under:

Appellate Forum	Monetary Limit  (INR)
GSTAT	20,00,000/- (20 Lakhs)
High Court	1,00,00,000/- (1 Crore)
Supreme Court	2,00,00,000/ (2 Crores)

• These threshold monetary limits shall apply to an appeal or application or Special Leave Petition (SLP)
• The appellate forums before which such monetary limits shall apply are GST Appellate Tribunal (GSTAT), High Court and Supreme Court.
• The appeals etc should shall be under any of the provisions of CGST Act

Principles to be observed for non filing of appeal

Following principles shall observed to decide whether the case is covered under section 120 and fall within the monetary limit for non-filing of appeal:

• Only aggregate amount of tax in dispute shall be considered (no interest, penalty)
• Monetary limit will cover all –CGST, SGST, UGST, IGST and Compensation Cess.
• In case of dispute being only of interest, amount of such interest shall be considered for monetary limit
• In case of dispute being only of penalty, amount of such penalty shall be considered for monetary limit.
• In case of dispute being only of late fee, amount of such late fee shall be considered for monetary limit.
• Where the dispute is of erroneous refund, refund amount in dispute shall be considered for monetary limit. Such refund could be of CGST / UTGST / SGST / IGST / Cess
• Monetary limit shall be applied on the disputed amount only and not including the admitted amount, if any.
• In case of composite order disposing more than one appeal / notice, monetary limit will apply to total amount involved and not to individual appeal / notice.

Thus, monetary limit for filing appeal shall be determined as follows:

Disputed Amount	What included for Monetary Limit
Tax + interest + penalty	Only Tax
Only interest	Such interest
Only penalty	Such penalty
Only late fee	Such late fee
Interest + penalty + late fee	Aggregate of interest + penalty +  late fee
Erroneous refund`	Refund amount
Common order from bunch of appeals / notices	Aggregate amount of demand  in common order (not individual appeals / notices)

Exceptional situations where threshold limit will not apply

• These threshold limits shall not be applicable in certain circumstances wherein the decision to file an appeal or application or SLP shall be taken on merits rather than based on said monetary limits, viz, exceptions where monetary limit for appeals shall not apply would cover circumstances where:

• Any provision has been had as ultra vires to the Constitution of India
• Any rule or regulation has been held to be ultra vires to the parent Act
• Any order, notification, instruction or circular issued by the Government or board has been held to be ultra vires of the Act or Rules
• Matters related to :

1. Valuation of goods or services
2. Classification of goods or services
3. Refunds
4. Place of Supply
5. Any other issues

 which are:

• Recurring in nature
• Involving interpretation

• Where strictures or adverse comments have been passed against government / department  including their officers
• Where cost has been imposed upon government / department  including their officers
• Other cases where CBIC is of the opinion that it is necessary in the interest of justice or revenue to contest the case.

Decision to file appeal or not to file

• Even where amount involved is more than the prescribed monetary limit, filing of appeal shall be decided on merits.
• While deciding to file appeal or not, objective shall be kept in mind, i.e. to reduce unnecessary litigation and providing certainty to taxpayers on tax assessment.

Precedent Value of Orders not appealed due to Monetary Limit

• The judgments against which appeal is not filed because of monetary limits, shall not have any precedent value, i.e., they will not be a binding precedent.
• Where appeal is not being filed due to monetary limit, reviewing authority will have to record that “even though the decision is not acceptable, appeal is not being filed as the amount involved is less than the monetary limit fixed by the Board.”
• Such not filing of appeal will not be deemed to result in ‘attaining of finality on an issue and will not preclude the tax officer from filing appeal or application in any other case involving the same or similar issues in which the tax in dispute exceeds the monetary limit.
• Appeal could also be filed in cases involving the question of law.
• Where appeal is not filed solely on the basis of the above monetary limits, there will be no presumption that the Department has acquiesced in the decision on the disputed issues in the case of same taxpayers or in case of any other taxpayers.
• In case any prior order is being cited or relied upon by the taxpayer, claiming that the same has been accepted by the Department, it will be checked as to whether such order was accepted only on account of the monetary limit before following them in the name of judicial discipline.
• It shall be the duty of the Department representative or counsel to bring the fact of non-filing of appeal before the Tribunal or court, i.e., appeal in such cases was not filed only for the reason of the amount of the tax in dispute being less than the specified monetary limit and, therefore, no inference shall be drawn that the decisions rendered therein were acceptable to the Department.

Last word

While the recent CBIC clarification provides comprehensive guidance on application of monetary limit, the same has reduced the scope of application of monetary limits of GST appeals as exceptions are many including valuation, classification, place supply, refunds, issues of recurring nature, interpretation issues and validity of provisions. It is to be noted that in GST regime, major issues have emanated from these areas only.