The Goods and Services Tax Appellate Tribunal (GSTAT), Division Bench, Court No. I, has dismissed a departmental appeal at the threshold on the ground that the disputed amount of ₹6,16,624 was below the prescribed ₹20 lakh monetary limit for departmental appeals and the Revenue failed to establish that the case fell within any recognised exception.
The bench of Sanjay Kumar Chandhariyavi (Judicial Member) and Sungita Sharma (Technical Member) has ruled that merely obtaining approval or authorisation from the Commissioner to file an appeal does not, by itself, permit the Department to bypass the applicable monetary-limit framework.
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The dispute concerned a registered GST dealer having its registered office at Noida, Uttar Pradesh. The Tribunal record states that the matter involved a penalty of ₹6,16,624 under the IGST Act.
An earlier appeal filed under Section 20 of the IGST Act, 2017, against the order of the proper officer had been allowed by the Appellate Authority. The penalty imposed by the Mobile Squad Officer was set aside, and directions were also issued for release of the goods and vehicle. The State Tax Department thereafter approached the GSTAT challenging the appellate order.
At the admission stage, the Tribunal therefore examined a preliminary question: whether the departmental appeal could legally proceed in view of the monetary threshold prescribed for departmental litigation.
The Tribunal emphasised that the filing of an appeal and the maintainability of an appeal are two different concepts.
According to the order, the mere presentation of an appeal before the Tribunal does not automatically create a right to have the matter heard on merits. Since the right of appeal is created by statute, it can be exercised only within the statutory framework and subject to conditions prescribed by law.
In support of this principle, the Tribunal referred to the Supreme Court decisions in Ganga Bai v. Vijay Kumar, (1974) 2 SCC 393, and Anant Mills Company Limited v. State of Gujarat, (1975) 2 SCC 175. The Tribunal noted that while the right of appeal is statutory, the legislature can prescribe conditions regulating its exercise.
The Tribunal then examined Section 120 of the UPGST Act, 2017. The provision, titled “Appeal not to be filed in certain cases”, empowers the Commissioner, on the recommendations of the GST Council, to issue orders, instructions or directions fixing monetary limits for regulating appeals or applications by State Tax officers.
Pursuant to this provision, Circular No. 2425008 dated July 5, 2024, issued by the Commissioner, State Tax, Uttar Pradesh, prescribed a monetary limit of ₹20 lakh for departmental appeals before the GSTAT, subject to specified exclusions and exceptions.
The Tribunal also noted that the policy had not become obsolete. Circular No. 252/2026-27/State Tax dated May 22, 2026, continued the State’s litigation-management framework concerning monetary limits, review mechanisms and departmental litigation before the GSTAT and higher constitutional courts.
The Tribunal examined the methodology contained in the departmental circular for determining whether an appeal falls within the prescribed monetary threshold.
It noted that where the dispute relates to a demand of tax, the aggregate disputed tax amount, including CGST, SGST/UTGST, IGST and Compensation Cess, is considered for applying the monetary limit.
Where the dispute concerns only interest, the disputed interest is considered. Similarly, where the dispute relates exclusively to penalty, the amount of penalty is relevant. For a dispute involving interest, penalty and/or late fee without any disputed tax component, the aggregate of those amounts is considered.
The circular further provides that the monetary limit is applied to the disputed amount involved in the particular appeal. In a composite order covering more than one appeal or demand notice, the relevant amounts are considered in aggregate rather than individually.
Applying the prescribed methodology, the GSTAT found that the dispute in the present case was confined to an IGST penalty of ₹6,16,624.
Since the amount was substantially below the ₹20 lakh threshold, the Tribunal held that the monetary restriction was attracted at the threshold stage.
However, the Tribunal clarified that a case falling below the monetary threshold could still be pursued if it came within one of the exceptions specifically recognised by the applicable litigation policy.
The circular permits departmental appeals below the monetary threshold in specified circumstances.
These include cases where a statutory provision under the CGST, UPGST, IGST or GST Compensation legislation has been held unconstitutional; where Rules or regulations have been held ultra vires the parent legislation; or where a Government or Board notification, instruction or circular has been held ultra vires the relevant GST law.
Exceptions also cover matters concerning valuation, classification, refunds, place of supply, or other recurring issues involving interpretation of statutory provisions, Rules, notifications, circulars or instructions.
Other exceptions include cases involving adverse comments or costs against the Government or its officers, as well as cases which, in the opinion of the Commissioner, require contest in the interest of justice or revenue.
A significant aspect of the ruling is the Tribunal’s observation that an exception to a monetary limit cannot simply be presumed.
Once it is established that the disputed amount is below ₹20 lakh, the burden shifts to the Revenue seeking to maintain the appeal to identify the particular exception being invoked and demonstrate the facts bringing the case within that exception.
The Tribunal stated that the Department must disclose the statutory or administrative provision supporting the exception. Where reliance is placed on the Commissioner’s residual discretion, the record must demonstrate that the Commissioner actually exercised that discretion in relation to the particular case and that the basis for the opinion is discernible.
The Tribunal drew a distinction between administrative permission to institute litigation and satisfaction of the statutory conditions governing maintainability.
It held that an officer may require administrative permission to file an appeal, but such permission does not automatically establish that the case qualifies for an exception to the monetary restriction.
In particular, the Tribunal observed that an authorisation to file an appeal is not equivalent to an authorisation to disregard the monetary limit. If the Department relies upon the exception based on the Commissioner’s opinion that the matter requires contest in the interest of justice or revenue, the record must show that the Commissioner formed such an opinion in the particular case and disclose the basis for doing so.
A generic approval, according to the Tribunal, cannot be converted into a statutory exception because doing so would effectively make the monetary threshold meaningless.
The Tribunal also examined Section 112(3) of the UPGST Act.
The provision permits the Commissioner to call for and examine the record of an order passed by the Appellate or Revisional Authority for the purpose of satisfying himself regarding its legality or propriety and, where appropriate, direct a subordinate officer to apply to the Appellate Tribunal on specified points.
The Tribunal held that a bare assertion that permission had been granted under Section 112(3) was insufficient. The record should enable the Tribunal to examine how the Commissioner formed the requisite opinion and upon what basis.
The Tribunal specifically considered the State’s subsequent Circular No. 252/2026-27/State Tax dated May 22, 2026.
According to the order, the 2026 framework establishes a structured review mechanism through Zonal Law Committees and continues the policy of restricting departmental litigation through monetary thresholds while preserving specified exceptions.
The Tribunal therefore rejected any suggestion that the ₹20 lakh monetary-limit policy was merely an outdated 2024 arrangement. It held that the threshold forms part of the continuing litigation-management policy of the State.
The Tribunal further stressed that the Department cannot rely upon its litigation-control mechanism when convenient while disregarding the same framework when an appellate order goes against it.
Referring to the Supreme Court’s decision in M/S. Ranadey Micronutrients v. Collector of Central Excise, (1996) 10 SCC 387, the Tribunal highlighted the importance of consistency and discipline in the implementation of departmental circulars.
It observed that instructions issued by competent revenue authorities concerning departmental appeals are intended to bind departmental officers.
The Tribunal rejected the proposition that the existence of a statutory right of appeal under Section 112 automatically requires every departmental appeal to be admitted.
It reiterated that the right of appeal is a creature of statute and its exercise remains subject to the statutory and regulatory framework governing departmental litigation.
The Tribunal referred again to Ganga Bai and Anant Mills Company Ltd. to underline that appellate jurisdiction does not amount to an unrestricted licence to litigate without complying with applicable conditions.
After examining the record, the GSTAT found that the appeal had been filed under Section 112(3) of the UPGST Act, but the Revenue had not specifically pleaded or established that the matter fell within any of the recognised exceptions.
The Tribunal found no material demonstrating that the case involved an unconstitutional statutory provision, an ultra vires Rule, an invalidated notification or circular, or a recurring question of law requiring authoritative determination.
There was also no material showing that adverse comments or costs had been imposed against the Department. Further, the record did not demonstrate that the Commissioner had, in this particular case, recorded the requisite opinion that the matter should nevertheless be contested in the interest of justice or revenue.
The Tribunal referred to the Supreme Court’s decision in Commissioner of Commercial Tax v. Vikram Cement, decided on February 5, 2026, which, according to the Tribunal’s order, considered the ₹20 lakh GST monetary limit and held that the relevant circular could apply even to pending appeals.
The Tribunal also referred to Supreme Court jurisprudence concerning responsible government litigation and the need to prevent unnecessary multi-tier litigation and docket explosion. It cited, among others, Director of Income Tax v. S.R.M.B. Dairy Farming (P) Ltd. and Commissioner of Customs, New Delhi v. Balaji Overseas.
The GSTAT observed that monetary limits do not mean that disputes below the threshold are legally insignificant. Rather, they represent an administrative determination that, ordinarily, public resources should not be deployed for departmental litigation involving such quantum unless a recognised exception applies.
Another important observation was that the Tribunal should not first examine the merits of a departmental appeal and only thereafter determine whether the appeal was maintainable.
The Tribunal held that the correct sequence is maintainability first and merits thereafter.
Where a statutory or administrative framework imposes a threshold condition upon departmental litigation, compliance with that condition must be examined at the admission stage. An arguable issue on merits cannot, by itself, override a binding monetary-limit policy.
The Tribunal recorded that the relevant disputed amount was ₹6,16,624, which was below the prescribed ₹20 lakh threshold.
It further found that the Revenue had failed to establish any recognised exception and had not produced material demonstrating a specific, reasoned and legally cognisable exercise of the Commissioner’s residual power in the particular case.
Consequently, the Tribunal held that the departmental appeal could not be admitted for adjudication on merits.
The appeal was accordingly dismissed at the threshold on the ground of the prescribed monetary limit and non-establishment of any applicable exception.
Importantly, the GSTAT expressly clarified that it had not examined or adjudicated the merits of the underlying tax dispute. The dismissal was confined to the maintainability of the departmental appeal under the applicable monetary-limit regime, and no finding was recorded regarding the correctness or otherwise of the impugned appellate order on merits.
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