When Can GST Dept. File Appeal Even If Disputed Amount Is Below Threshold Limit?

In a significant step towards reducing tax litigation and streamlining appellate procedures, the Central Board of Indirect Taxes and Customs (CBIC) has set a monetary threshold of Rs. 20 lakh for filing appeals before the Goods and Services Tax Appellate Tribunal (GSTAT) by Central Tax officers. 

This new provision, which is in line with the powers conferred under Section 120 of the CGST Act, aims to reduce unnecessary litigation, ensure judicial efficiency, and bring greater certainty to taxpayers. The move, endorsed by the GST Council, is expected to minimize the number of appeals filed for disputes involving smaller amounts and focus resources on higher-stakes cases.

Under this new framework, tax officers will not file appeals before the GSTAT if the disputed amount of tax is less than Rs. 20 lakh, except in specific cases where the appeal is necessary due to the nature of the dispute. The amount considered for the threshold depends on the type of dispute involved. For disputes relating to tax demand (with or without penalty or interest), the total amount of tax in dispute—including CGST, SGST/UTGST, IGST, and Compensation Cess—will be considered for applying the monetary limit. In cases where the dispute is only related to interest, penalty, or late fees, the amount of interest, penalty, or late fee will be considered. Additionally, if a dispute involves erroneous refunds, the total refund amount in question will be factored into the decision.

In cases involving composite orders that dispose of multiple appeals or demand notices, the combined amount of tax, interest, penalty, or late fee will be used to determine whether the ₹20 lakh threshold applies. This ensures consistency and fairness in cases involving multiple issues.

Exemptions: When Appeals Can Be Filed Regardless of the ₹20 Lakh Limit

Despite the ₹20 lakh threshold for filing appeals before the GST Appellate Tribunal (GSTAT), there are specific circumstances where the tax department can file appeals regardless of the disputed amount. These exemptions apply in the following cases:

1. Constitutional Challenges: Appeals will be filed if any provision of the CGST Act or related laws (SGST/UTGST Act, IGST Act, or GST (Compensation to States) Act) is held ultra vires the Constitution of India.
2. Invalidity of Rules or Notifications: If any rules, regulations, orders, notifications, or circulars issued under the CGST Act or its allied laws are deemed ultra vires the parent Act, an appeal will be pursued.
3. Recurring Legal Issues: Disputes involving recurring issues such as the valuation of goods or services, classification of goods or services, place of supply, or refunds may prompt appeals, as these often require authoritative interpretation.
4. Adverse Judicial Comments: In cases where strictures or adverse comments have been made against the government or its officers, or where costs have been imposed, an appeal will be filed regardless of the disputed amount.
5. Revenue or Justice Considerations: Appeals may also be filed when the interest of revenue or justice demands it, even if the disputed amount is below the ₹20 lakh limit.

These exemptions ensure that critical legal and constitutional matters, as well as recurring issues requiring legal clarity, are appropriately addressed, irrespective of the monetary threshold.

Read More: 10 Must Know Points Before Filing Appeal Before GSTAT