CBEC Enhances Monetary Limits for Appeals - Retrospective?

By Vijay Kumar

DDT 2744 14 12 2015 reported that CBDT has enhanced the monetary limits for filing appeals by the Department before the Tribunal and High Courts. This was done with retrospective effect for pending appeals. DDT asked, "Will CBEC follow suit?".

CBEC did.

CBEC issued an instruction yesterday amending the earlier instruction in F.No.390/Misc./163/2010-JC, dated, 17.08 2011

Appeals have to be filed in the following cases irrespective of the monetary limits:

a) Where the constitutional validity of the provisions of an Act or Rule is under challenge.

b) Where Notification/ Instruction/ Order or Circular has been held illegal or ultra vires.

c) Classification and refunds issues which are of legal and/or recurring nature.

The above clause (c) was added yesterday.

The Board has not clarified whether these instructions are applicable for pending cases, as done by CBDT.This issue by itself could generate further litigation. Without waiting for litigation to mount, CBEC should clarify that the limits apply to pending litigation also. Please don't create litigation on litigation.

CBDT has directed that Pending appeals below the specified tax limits may be withdrawn/not pressed. Based on the CBDT instruction dated 10.12.2015, the ITAT, Ahmedabad passed an order on 15.12.2015 dismissing 251 Revenue Appeals in one stroke on the single ground that the tax effect in each of the appeals was less than 10 lakh rupees. The ITAT was all praise for the CBDT observing,

"we need to take note of a very pragmatic initiative, taken by the Central Board of Direct Taxes last week, for reducing litigation in direct taxes. Vide circular no. 21/ 2015 dated 10th December 2015, the Central Board of Direct Taxes has, inter alia , announced that, subject to certain exceptions- which are not relevant in the present context, henceforth, no departmental appeals will be filed against relief given by the CIT(A), before this Tribunal, unless the tax effect, excluding interest, exceeds Rs 10,00,000. What is even more important is that not only that such a taxpayer friendly measure will be implemented in all future tax litigation, even the pending appeals, wherever the tax involved in the appeals does not exceed Rs 10,00,000, shall not be pressed or withdrawn. In effect thus, irrespective of the year to which the departmental appeal before the Tribunal pertains, as long as such an appeal is pending before the Tribunal, this will be a legal nullity.

The ITAT further observed,

It is indeed heartening to note that in one stroke, the Government has not only prevented, but withdrawn, thousands of appeals before this Tribunal and before Hon'ble High Courts. In Ahmedabad benches and E-Court alone, as a result of this laudable initiative, almost 1,500 such appeals are listed for hearing this week, and will hopefully go off ITAT pendency dockets. We are sure this will allow everyone to concentrate on really important work and contribute to speedier resolution of serious and more important tax litigation. In an environment in which retrospectivity was attached only to the taxation and not to tax reliefs or concessions, such a paradigm shift in approach is unprecedented and possibly a game changing initiative heralding a new era in thoughtful litigation management .

CBEC and CESTAT should follow the example set by CBDT and ITAT.

The other day, I saw in the CESTAT a DR fairly concede that a part of the demand was not sustainable and if that amount is deducted, the rest of the demand was less than 5 lakh rupees and so below the monetary limit.

Also see DDT 2674 dt. 31.08.2015 & 2015-TIOL-2512-HC-MAD-ST.

CBEC Instruction in F. No.390/Misc./163/2010-JC., Dated: December 17 2015