Revenue appeal below Rs.5 lakhs is rejected by CESTAT
IN order to reduce Government litigation, the CBEC, in exercise of the powers conferred by Section 35R of the CEA, 1944 made applicable to Service Tax vide Section 83 of the FA, 1994 and Section 131BA of the Customs Act, 1962 fixed the following monetary limits for filing appeals by the Department before CESTAT/High Courts and Supreme court. [See Instruction CBEC Instruction in F.No.390/Misc./163/2010-JC., Dated: August 17, 2011]:
Sl. No. | Appellate Forum | Monetary limit |
|---|---|---|
1. | CESTAT | Rs.5,00,000/- |
2. | HIGH COURTS | Rs.10,00,000/- |
3. | SUPREME COURT | Rs.25,00,000/- |
It is also clarified that for ascertaining whether a matter would be covered within or without the aforementioned limits, the determinative element would be duty/tax under dispute. Nonetheless, the instruction also mentions that the revised monetary limits shall come into force from 1.9.2011.
That coming into force date is obviously for the Departmental officials to follow.
But what about the Revenue appeals filed before this date and which have been languishing in the Tribunal or for that matter those appeals filed before the issuance of the earlier instruction effective from 01/11/2010 when the monetary limits were only Rs.1 Lakh, Rs.2 lakhs and Rs.5 lakhs respectively. [CBEC Instructions in F.No.390 /Misc./163/2010- JC : dated October 20, 2010]
Incidentally, on the Income Tax side, the CBDT has issued an Instruction No. dated 09.02.2011 fixing the monetary limit for filing appeals by the department as:-
(1) Appeal before the Appellate Tribunal - Rs.3,00,000/-
(2) Appeal under Section 260A before the High Court - Rs.10,00,000/-
(3) Appeal before the Supreme Court - Rs.25,00,000/-
The Karnataka High Court in the case of Commissioner of Income Tax, Bangalore vs. Ranka & Ranka () while answering the following question "Whether instruction No.3/2011 dated 09.02.2011 is prospective only or whether it applies to pending appeals before the High Court on the day the instruction was issued?" has held -
"32. Though the circular/instruction 3/11 is issued by the Department in pursuance of the power conferred under the statutory provisions while issuing such circular/instruction, the Department has not kept in mind the object with which such circulars/instructions are issued from time to time. The object sought to be achieved by such circulars/instructions and also the law declared by the Apex Court, the National Litigation Policy 2011 as well as the various schemes introduced by the Department granting relief to persons who have not even filed returns and paid taxes, are kept in mind, to bring the circular/instruction in harmony with the National Litigation Policy, it would be appropriate to hold that the benefit of such circular/instruction also applies to the pending cases in appeal in various Courts and Tribunals on the date of the circular/instruction."
In the present case, the CCE, Aurangabad had filed an appeal before the CESTAT against an order dated 15/02/2008 passed by the Commissioner (A) involving Service Tax matter.
The Revenue appeal had come up before the CESTAT recently. The respondent chose to remain absent.
The Bench observed that the amount involved in the Revenue appeal is below Rs.5 lakhs. After adverting to the Karnataka High Court decision, the CESTAT held that the appeal is not maintainable and accordingly rejected the Revenue appeal.
Quite possibly, if this exercise is conducted on a large scale, the CESTAT pendency would drop down drastically!