In a recent ruling of the Supreme Court, a division bench composed of Justice M.R.Shah and Justice Sudhanshu Dhulia disposed of the appeal filed by the appellant on the ground of low tax effect.
The counsels of the respective parties reported that the tax effect of both the appeals for the relevant A.Y.- 1995-96 and A.Y. 1996-97 would be less than Rs. 2 Crores.
The Central Board of Indirect Taxes & Customs (CBIC) plainly states in Circular F.No.390/Misc/116/2017-JC, which was released on 22.08.2019, that the amount required to file an appeal with the Supreme Court cannot exceed Rs. 2 crores.
The Section 35R of the Central Excise Act, 1944 and made applicable to Service Tax vide Section 83 of the Finance Act, 1994, the CBIC has the power to fix the monetary limits for the Customs Excise and Service Tax Appellate Tribunals (CESTATs), High Court and Supreme Court.
The circular makes it quite plain that each tribunal and court has its own jurisdictional boundaries when considering appeals.
The monetary limit of CESTAT was raised from Rs. 20 Lakhs to Rs. 50 Lakhs. In the case of the High Court, the limit was raised from Rs. 50 Lakhs to Rs. 1 crore. The monetary limit of the Supreme Court also raised from Rs. 1 crores to Rs. 2 crores.
According to the circular, the instruction only applies to the legal issues related to Central Excise and Service Tax. As per the circular above-mentioned, the monetary limits are not applicable to the substantial question of law as described in the paragraph 1.3 of the instruction dated 17.08.2011 from F. No. 390/ Misc /163 /2010- JCF would be contested irrespective of the monetary limits.
However, a new updated circular was issued by the CBIC on 03. 04. 2018 to modify partial of earlier Instruction dated 17.12.2015 from F No 390/Misc/163/2010-JC the Central Board of Excise & Customs has decided to omit paragraph 2 of the instruction dated 17.12.2015 from F. No. 390/Misc/163/2010.
This paragraph introduced a sub clause ‘c’ in the instruction dated 17.08.2011 from F. No. 390/Misc/163/2010-JC that was an exclusion clause that operated as an exception to the general monetary limits instruction.
By this exception, adverse judgements pertaining to “classification and refunds issues which are of legal and/or recurring nature”, were to be contested irrespective of the amount involved. This sub clause ‘c’ has withdrawn with effect from the date of the instruction.
Consequently, the beach disposed of the appeal; however, the question of law is kept open.
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