The Goods and Services Tax Appellate Tribunal (GSTAT), State Bench at Ghaziabad, has dismissed a departmental appeal involving a disputed penalty of ₹1,41,318, holding that the Revenue cannot pursue an appeal below the prescribed ₹20 lakh monetary limit without specifically establishing a recognised exception.
The bench comprising Dr. Sanjay Kumar Chandhariyavi, Member (Judicial), and Sungita Sharma, Member (Technical), held that routine approval or authorisation by the Commissioner does not, by itself, exempt a departmental appeal from the binding monetary-limit policy.
Buy Now: 160+ GST E-Magazine September 2026
The Tribunal distinguished between statutory authorisation to file an appeal and a specific decision permitting litigation despite the monetary restriction. It dismissed the appeal at the admission stage, expressly leaving the merits of the underlying dispute undecided.
According to the order, the dispute concerned the transportation of e-rickshaws purchased by Duke Auto India from Tech-9 EV Solutions, Faridabad, Haryana. The goods covered by an invoice dated June 1, 2022, were valued at ₹29,83,610.80. Goods covered by other invoices were also loaded in the vehicle.
The Assistant Commissioner, Mobile Squad Unit-I, Gautam Buddha Nagar, intercepted the vehicle and initiated proceedings concerning alleged violations of Section 68 and Rule 138 of the GST framework. The order records an allegation relating to transportation through another vehicle and a direction to deposit a penalty of ₹1,41,318.
When the departmental appeal reached GSTAT, the bench first examined whether it satisfied the conditions governing admission.
The Tribunal referred to Section 120 of the Uttar Pradesh Goods and Services Tax Act, 2017, which empowers the Commissioner, on the GST Council’s recommendations, to fix monetary limits regulating departmental appeals.
As recorded in the ruling, Circular No. 2425008 dated July 5, 2024, prescribed a monetary limit of ₹20 lakh for departmental appeals before GSTAT, subject to specified exceptions.
The bench also referred to Circular No. 252/2026-27/State Tax dated May 22, 2026, concerning monetary limits, review of departmental appeals and litigation before GSTAT and higher constitutional courts.
The Tribunal observed that the policy was intended to reduce government litigation and ensure proper use of judicial resources. The continuing framework showed that the monetary restriction could not be treated as an abandoned administrative arrangement.
The Tribunal explained that the relevant amount depends on the nature of the dispute.
Where tax is disputed, with or without interest or penalty, the aggregate disputed tax and applicable cess are considered. Interest and penalty are not added to the disputed tax for this calculation.
Where only penalty is disputed, the disputed penalty becomes the relevant amount. The circular separately addresses disputes involving interest, late fees, combinations of those amounts without tax, and erroneous refunds.
In the present case, the relevant disputed amount was ₹1,41,318 in penalty, which was below the ₹20 lakh threshold. The substantially higher value of the transported goods did not determine whether the departmental appeal crossed the monetary limit.
The Tribunal recognised that departmental appeals below the threshold may proceed where a prescribed exception applies.
As described in the order, exceptions include cases involving GST provisions held unconstitutional, subordinate legislation held beyond the parent statute, or government or Board instruments held contrary to GST law.
They also cover specified recurring or interpretative issues, including valuation, classification, refunds and place of supply; adverse comments, strictures or costs against the Government, Department or its officers; and cases the Commissioner considers necessary to contest in the interest of justice or revenue.
However, the bench held that an exception cannot be presumed merely because the Department wishes to challenge an adverse order.
Once the disputed amount is shown to be below the threshold, the Revenue must identify the exception, state the supporting facts and demonstrate the statutory or administrative basis for invoking it.
A central issue was whether the Commissioner’s permission to file the appeal was sufficient to overcome the monetary restriction.
The Tribunal explained that Section 112(3) permits the Commissioner to examine the legality or propriety of an appellate or revisional order and direct a subordinate officer to approach GSTAT on specified points.
Under Section 112(4), that application is treated as an appeal. However, authorisation under Section 112 does not dispense with Section 120 or the instructions issued under it.
Where the Department relies on the Commissioner’s residual power to contest a low-value case in the interest of justice or revenue, the record must show that the Commissioner considered the particular case and formed the required opinion. The basis for proceeding despite the monetary limit must be apparent.
The bench reasoned that treating general approval as sufficient would allow every appeal below the threshold to proceed through routine authorisation, defeating the policy itself.
After examining the record and FORM GST APL-07, the Tribunal found that the Revenue had neither specifically pleaded nor established a recognised exception.
There was no material showing a constitutional or statutory-validity issue, a recurring question requiring authoritative determination, or adverse comments or costs against the Department.
Nor was there a recorded case-specific opinion demonstrating that the Commissioner had decided to contest the matter in the interest of justice or revenue despite the monetary restriction.
The Tribunal therefore concluded that the appeal did not satisfy the conditions governing admission and maintainability.
The bench declined the Revenue’s invitation to examine the substantive dispute, stressing that maintainability must be determined first.
An arguable case on merits could not, by itself, overcome the binding litigation policy. The existence of appellate jurisdiction did not require the Tribunal to admit every departmental appeal without examining compliance with the governing conditions.
The Tribunal also emphasised that government litigation consumes judicial time, departmental resources and public money. Monetary thresholds seek to ensure that litigation is pursued where the amount involved, legal significance, recurring issue or recognised exception justifies it.
The Tribunal dismissed the departmental appeal at the threshold because the disputed penalty was below ₹20 lakh and the Revenue had failed to establish an applicable exception.
It expressly clarified that the dismissal neither approved nor rejected the correctness of the challenged order on merits. Consequently, the ruling does not decide whether the alleged transport-related contravention occurred or whether the penalty was substantively justified.
The bench also referred to Section 120’s safeguards: refraining from an appeal under the monetary-limit policy does not prevent the Revenue from contesting a similar issue in another case, nor does it automatically amount to acceptance of the disputed legal position.
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.
