The Goods and Services Tax Appellate Tribunal (GSTAT), Surat Bench, has dismissed an appeal filed by the Central Goods and Services Tax Department after finding that it was contrary to the litigation policy prescribed by the Central Board of Indirect Taxes and Customs (CBIC).
The Division Bench comprising Sanjaykumar Dwivedi, Member (Judicial), and Rameshkumar G. Hadvani, Member (Technical), dismissed the departmental appeal by relying on CBIC Circular No. 207/1/2024-GST dated June 26, 2024.
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The appeal had been filed by the Assistant Commissioner of CGST and Central Excise, Division-XI, Ankleshwar, Vadodara-II Commissionerate, against Rutu Chemicals, a registered taxpayer operating from the GIDC Industrial Estate in Panoli, Bharuch, Gujarat.
In its brief order, the Tribunal stated, “Appeal dismissed as being against the litigation policy of the department vide Circular No. 207/1/2024-GST, 26th June 2024.”
The Tribunal clarified that a detailed order would follow.
The Department was represented by Santosh Kumar, Superintendent and authorised representative. No one appeared on behalf of the respondent-taxpayer.
CBIC’s Monetary Limits for GST Appeals
Circular No. 207/1/2024-GST was issued as part of the government’s policy to reduce avoidable tax litigation and ensure better utilisation of judicial resources. It fixes monetary thresholds below which Central Tax officers ordinarily should not institute appeals or applications.
Under the circular, the monetary limits are:
| Appellate forum | Monetary limit |
| GST Appellate Tribunal | ₹20 lakh |
| High Court | ₹1 crore |
| Supreme Court | ₹2 crore |
Consequently, departmental appeals before the GSTAT ordinarily should not be filed where the disputed amount falls below ₹20 lakh, unless the case is covered by one of the specified exceptions.
The monetary limits were prescribed by the Board in exercise of its powers under Sections 120 and 168 of the Central Goods and Services Tax Act, 2017, on the recommendations of the GST Council.
How the Disputed Amount Is Calculated
The circular provides that where a dispute concerns a tax demand, the aggregate amount of disputed tax—including CGST, SGST or UTGST, IGST and Compensation Cess—must be considered. Interest and penalty accompanying such a tax demand are not included when applying the monetary threshold.
Where the dispute exclusively concerns interest, penalty or late fee, the respective amount must be considered. If the proceedings involve interest, penalty and late fee without any disputed tax component, their aggregate amount is relevant.
In erroneous-refund cases, the amount of refund under dispute is taken into account. For a composite order disposing of multiple appeals or demand notices, the limit applies to the total disputed amount covered by the order and not separately to each appeal or notice.
Exceptions to the Monetary Threshold
The monetary restrictions are not absolute. The circular permits the Department to contest cases on merits irrespective of the amount involved in specified circumstances.
These include cases where a statutory provision has been declared unconstitutional, a rule or regulation has been held to be beyond the parent legislation, or a government notification, circular, instruction or order has been declared contrary to the GST enactments or rules.
Cases involving recurring or interpretative questions relating to classification, valuation, refunds and place of supply may also be pursued regardless of the monetary amount. The exception further covers matters in which courts or tribunals have passed strictures or adverse remarks against the government or its officers, or imposed costs on them.
The Board may also authorise litigation in any other case where contesting the matter is considered necessary in the interests of justice or revenue.
Higher Amount Does Not Automatically Justify Appeal
The CBIC circular makes it clear that an appeal should not be filed merely because the disputed amount exceeds the applicable monetary limit. Even above the threshold, the Department must evaluate the merits of the case before deciding to litigate.
Tax officers have been directed to keep in view the broader objective of reducing unnecessary litigation and providing certainty to taxpayers.
At the same time, the Department’s decision not to file an appeal because of a low disputed amount does not mean that it has accepted the underlying legal position. Such orders do not acquire precedent value merely because the Revenue did not challenge them.
The latest GSTAT order reinforces that departmental officers are required to observe the litigation thresholds fixed by the CBIC. An appeal inconsistent with those instructions may be dismissed without the Tribunal entering into the merits of the underlying tax controversy.
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