Rs. 2 Crore Monetary Limit Under 2024 CBIC Policy Covers Ongoing Appeals, Not Only Fresh Filings: Supreme Court [Read Judgement]

In a recent ruling, the Supreme Court dismissed the appeals filed by the State on the ground that the tax effect involved was below the Rs. 2 crore monetary limit fixed under the 2024 CBIC policy and held that this bar applies even to pending appeals and not only to future filings.

The case arose from a judgment of the Full Bench of the Madhya Pradesh High Court, which had set aside reassessment proceedings initiated under Section 19(1) of the Madhya Pradesh General Sales Tax Act, 1958, holding that they were barred by limitation. The State had challenged the High Court’s decision before the Supreme Court.

The Vikaram Cement, respondent-assessee was originally assessed for the assessment year 1987-88. An additional demand of Rs. 41,062 was raised on 19.03.1991. The assessee filed an appeal stating violation of principles of natural justice, since certain declarations in Form B-2 were not allowed at the time of assessment.

By order, the Appellate Authority set aside the assessment order and remanded the matter to the Assessing Authority with a direction to give reasonable opportunity to submit the declarations.

A fresh assessment order was passed. After about three years, the authorities issued a notice under Section 19(1) for reassessment. Following this, an order assessed liability of Rs. 25,47,448. The assessee challenged the reassessment as time-barred. The appeal and revision were dismissed, and then the assessee filed a writ petition before the High Court. The Full Bench allowed the writ petition and quashed the reassessment proceedings as barred by limitation.

Before the Supreme Court, the State’s counsel argued that because of the repeal and saving provision under Section 174(2)(f), the pending appeals under the old Act would continue and the monetary limit fixed under the Circular would not apply to such pending cases. They argued that the restriction was meant only for future appeals and not for appeals already filed.

The Bench comprising Justice Aravind Kumar and Justice Prasanna B. Varale observed that the Circular dated 26.06.2024 fixed the monetary limit of Rs. 2 crore for filing or pursuing appeals before the Supreme Court. The tax component involved in these appeals was Rs. 25,47,448, which is much below the prescribed limit.

The court explained that a plain reading of the Circular shows that the monetary limit applies even to pending appeals. It pointed out that the Circular uses the words “appeal should not be pursued,” which also covers ongoing appeals and not just future filings. The court found that the argument based on the repeal and saving clause cannot be accepted in view of the clear wording of the Circular.

The Supreme Court dismissed the appeals on the ground that they are barred by the monetary limit fixed under the 2024 Circular. The court made it clear that it has not expressed any opinion on the question of law raised, and the issue is kept open to be raised in a proper case. Pending applications, if any, also stands disposed of.

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