The Goods and Services Tax Appellate Tribunal (GSTAT), Ernakulam Bench, has dismissed a Revenue appeal challenging the deletion of ₹7.35 lakh in GST interest after finding that the disputed amount was below the ₹20 lakh monetary threshold prescribed for departmental appeals before the Tribunal.

The Bench of Subramanya Rayaprol (Vice-President) and Ramamoorthi Sriram (Technical Member) has observed that the appeal was barred by the monetary limits fixed under the National Litigation Policy through CBIC Circular No. 207/1/2024-GST dated June 26, 2024.

The Tribunal noted that the dispute related exclusively to interest and involved ₹7,35,714. Since the amount was substantially below the ₹20 lakh threshold applicable to departmental appeals before GSTAT, the Revenue’s challenge could not be maintained.

Buy Now: 150 + Judgments On GST – E-Compilation For August 2026

Surya Business Combines is a partnership firm engaged in supplying telephone sets, including telephones used for cellular and other networks, classified under HSN 8517.

The dispute arose after the GST authorities issued a show-cause notice dated March 28, 2023, seeking recovery of ₹10,01,390 as interest on account of the delayed filing of GST returns and the consequent late payment of tax.

The proposed amount consisted of ₹5,00,695 each under the Central Goods and Services Tax and Kerala Goods and Services Tax components.

The adjudicating authority, through an order dated December 12, 2023, confirmed the entire interest demand under Section 50 of the CGST and KGST Acts. It also imposed a penalty of ₹10,000 under Section 125 of the respective enactments.

The taxpayer challenged the adjudication order before the Joint Commissioner (Appeals).

The first appellate authority modified the original order on October 26, 2024, and substantially reduced the interest liability.

It held that interest under Section 50(1), read with Rule 88B of the GST Rules, was payable only on the portion of tax discharged by debiting the electronic cash ledger.

Accordingly, the appellate authority confirmed interest of ₹2,65,676, consisting of ₹1,32,838 each under the CGST and KGST heads.

The remaining interest demand of ₹7,35,714, relating to tax discharged through the electronic credit ledger, was dropped as legally unsustainable.

The Revenue approached GSTAT against the appellate authority’s decision to delete interest on the tax liability discharged through the electronic credit ledger.

It contended that interest was chargeable on the entire amount of tax that had been short-paid and could not be confined only to the amount subsequently discharged by debiting the electronic cash ledger.

On this basis, the department argued that restricting the interest demand to ₹2,65,676 and deleting the balance amount of ₹7,35,714 was neither legal nor proper.

No representative appeared for the taxpayer during the hearing before GSTAT. The Tribunal heard Deputy Commissioner Baiju Daniel, who represented the Revenue.

Before entering into the substantive controversy concerning the computation of interest, the Tribunal examined whether the departmental appeal met the monetary threshold prescribed by the CBIC.

Circular No. 207/1/2024-GST was issued as part of the government’s policy to reduce tax litigation. Exercising its powers under Sections 120 and 168 of the CGST Act, the Board prescribed minimum monetary limits for appeals filed by Central Tax officers.

Under the circular, departmental appeals ordinarily should not be filed where the disputed amount is below: ₹20 lakh before GSTAT; ₹1 crore before a High Court; and ₹2 crore before the Supreme Court.

The circular also explains how the disputed amount must be calculated depending on the nature of the controversy.

Where a dispute concerns interest alone, the amount of interest under challenge must be considered for determining whether the monetary limit is satisfied. Similarly, where only a penalty or late fee is disputed, the respective penalty or late-fee amount is relevant.

Applying the circular, GSTAT observed that the Revenue was challenging the deletion of interest amounting to ₹7,35,714.

Since this was an interest-only dispute, that amount—and not the total tax liability or the original interest demand—had to be considered for determining the maintainability of the departmental appeal.

The Tribunal found that ₹7.35 lakh was well below the ₹20 lakh threshold prescribed for filing an appeal before GSTAT.

It further observed that the monetary limits had been fixed by the CBIC on the recommendations of the GST Council and were applicable to Central as well as State Tax officers under the statutory litigation-management framework.

The CBIC circular permits the department to contest certain matters irrespective of the disputed amount.

These exceptions include cases where a statutory provision, rule, notification, circular or instruction has been declared unconstitutional or ultra vires. The exclusions also cover specified disputes involving valuation, classification, refunds and place of supply, as well as recurring interpretational issues.

Departmental appeals may also be maintained where a court or tribunal has passed strictures against the government or imposed costs on its officers, or where the Board considers litigation necessary in the interest of justice or revenue.

GSTAT, however, found that the appeal against Surya Business Combines did not fall within any of the exclusions identified in the circular.

The Tribunal consequently held that the Revenue’s appeal was beyond the permissible monetary limit and was liable to be dismissed.

The appeal was dismissed solely on account of the National Litigation Policy and the applicable monetary threshold.

The Tribunal did not adjudicate the Revenue’s substantive argument that interest should be charged on the entire delayed tax payment, including the portion discharged through the electronic credit ledger.

As a result, the first appellate authority’s decision restricting interest to ₹2,65,676 and dropping the balance demand of ₹7,35,714 remains undisturbed in this case.

“The amount involved in the present case is below the prescribed monetary limit of ₹20 lakhs,” the Tribunal recorded while dismissing the departmental appeal.

Membership Required to Access Case Details & Order Copy

To view the complete Case Details and Download Order Copy, you must have an active membership. Please subscribe to continue.

Read More: GST Refund Can’t Be Denied by Questioning ITC Eligibility Without S. 73 or 74 Proceedings: GSTAT