The Goods and Services Tax Appellate Tribunal (GSTAT), Division Bench, Court No. I, has dismissed a departmental appeal involving a disputed tax amount of ₹1,98,806, holding that the appeal could not be admitted as the amount was substantially below the prescribed ₹20 lakh monetary threshold for departmental appeals.
The bench of Sanjay Kumar Chandhariyavi (Judicial Member) and Sungita Sharma (Technical Member) emphasised that the right to appeal is a statutory right and is subject to the conditions prescribed under law and the applicable departmental litigation policy. It further held that merely obtaining the Commissioner’s approval to file an appeal does not, by itself, constitute an exception to the monetary limit.
Buy Now: E-Way Bill Judgements From 2020–2026 [Includes Orders of GSTAT]
The appeal was filed by the State Tax Department against an appellate order concerning the financial year 2020-21. The respondent, a registered GST dealer engaged in real estate appraisal services provided on a fee, commission or contractual basis, was the respondent in the departmental proceedings.
The dispute involved tax of ₹1,98,806. The original proceedings had resulted in a demand under the U.P. Goods and Services Tax Act, 2017, involving IGST, CGST and SGST. The first appellate authority partially allowed the appeal and set aside the relevant tax and interest demand. The Revenue thereafter approached the GSTAT.
At the admission stage itself, however, the Tribunal examined whether the departmental appeal was maintainable in view of the monetary-limit framework governing appeals filed by the State Tax Department.
The Tribunal observed that admission of an appeal is not merely a procedural formality. Before proceeding to examine the merits, the Tribunal must determine whether the appeal is legally maintainable.
Relying upon the principles laid down by the Supreme Court in Ganga Bai v. Vijay Kumar and Anant Mills Company Ltd. v. State of Gujarat, the Tribunal reiterated that the right of appeal does not exist as an inherent right. It is a creation of statute and can therefore be exercised only in accordance with statutory conditions.
Accordingly, the fact that the Department had filed an appeal did not automatically give it an entitlement to have the dispute adjudicated on merits.
The Tribunal noted that Section 120 of the UPGST Act, 2017, empowers the Commissioner, on the recommendations of the GST Council, to issue orders, instructions or directions prescribing monetary limits for regulating departmental appeals.
Pursuant to this provision, the Commissioner, State Tax, Uttar Pradesh issued Circular No. 2425008 dated July 5, 2024, prescribing, among other things, a ₹20 lakh monetary threshold for departmental appeals before the GSTAT, subject to specified exclusions and exceptions.
The Tribunal also took note of Circular No. 252/2026-27/State Tax dated May 22, 2026, which continued the State’s litigation-management framework concerning monetary limits, review mechanisms and departmental litigation before the GSTAT and higher constitutional courts.
Under the departmental circular, where a dispute concerns a demand of tax, the aggregate amount of tax in dispute—including CGST, SGST/UTGST, IGST and Compensation Cess—is to be considered for determining whether the monetary threshold is crossed.
The Tribunal also noted that the monetary limit is to be applied to the disputed amount relevant to the proposed appeal. In composite matters involving multiple demands or appeals, the prescribed methodology applies to the aggregate amount.
In the present case, the disputed amount was only ₹1,98,806, which was clearly below the prescribed ₹20 lakh threshold. The Tribunal therefore held that the first threshold condition was attracted.
The Tribunal clarified that falling below the monetary threshold does not automatically dispose of every departmental appeal. The applicable circular recognises certain exceptions under which the Department may pursue an appeal notwithstanding the monetary limit.
These include cases involving, among other things:
- A provision of the CGST, UPGST or IGST Act being held unconstitutional;
- Rules or regulations being held ultra vires the parent legislation;
- Government or Board notifications, instructions or circulars being held ultra vires;
- Issues involving valuation or classification of goods or services;
- Refund-related matters;
- Place of supply issues;
- Recurring issues involving interpretation of GST provisions;
- Adverse comments or costs imposed against the Government or its officers; and
- Other cases where the Commissioner considers it necessary to contest the matter in the interest of justice or revenue.
A significant aspect of the ruling is the Tribunal’s finding that an exception to the monetary threshold cannot simply be presumed.
Once it is established that the disputed amount is below ₹20 lakh, the burden shifts to the Revenue to establish why the appeal should nevertheless be entertained. The Department must identify the particular exception being invoked, demonstrate the facts bringing the case within that exception, and identify the statutory or administrative provision supporting the exception.
Where the Department relies upon the Commissioner’s residual discretion to contest a low-value matter in the interest of justice or revenue, the Tribunal held that the record must demonstrate that the Commissioner actually formed such an opinion in the particular case and disclose the basis for that decision.
The Tribunal made a distinction between administrative authorisation to institute litigation and statutory compliance with the monetary-limit regime.
It held that an authorisation to file an appeal cannot automatically be treated as an authorisation to disregard the prescribed monetary limit. A generic approval from the Commissioner cannot be elevated into a statutory exception.
According to the Tribunal, permitting every appeal below ₹20 lakh merely on the basis of general administrative approval would defeat the very purpose of the monetary-limit policy.
The Tribunal also referred to Section 112(3) of the UPGST Act, under which the Commissioner may examine the legality or propriety of an appellate or revisional order and direct an officer to apply to the Appellate Tribunal. It observed that the statutory procedure requires a specific course of action and that the Tribunal should be able to examine how the requisite opinion was formed and on what basis.
The Tribunal rejected any suggestion that the 2024 monetary-limit circular had become obsolete.
It noted that the subsequent Circular No. 252/2026-27/State Tax dated May 22, 2026, continued the monetary-limit framework while introducing a structured review mechanism through Zonal Law Committees.
The Tribunal described the policy as part of the Department’s continuing litigation-management framework and observed that the State, as a litigant, is expected to conduct litigation consistently with its declared policy.
The Tribunal further stressed the binding nature of departmental litigation instructions.
Referring to the Supreme Court’s decision in M/s. Ranadey Micronutrients v. Collector of Central Excise, the Tribunal observed that the Revenue cannot repudiate a circular issued by the competent authority merely because it may be inconsistent with the Department’s position in a particular case.
The Tribunal emphasised that consistency and discipline in departmental litigation are important considerations and that the Revenue cannot invoke a litigation-control mechanism when convenient while ignoring the same mechanism when an adverse order is passed.
On examination of the appeal, the Tribunal found that the Revenue had not specifically pleaded or established that the case fell within any of the recognised exceptions.
There was no material showing that the matter involved an unconstitutional statutory provision, an ultra vires rule or notification, a recurring question of law requiring authoritative determination, adverse comments or costs against the Department, or a specific and reasoned exercise of the Commissioner’s residual power to contest the case despite the monetary limit.
Consequently, the Tribunal concluded that the Revenue had failed to establish a basis for bypassing the ₹20 lakh threshold.
The GSTAT also declined the Revenue’s request to proceed to the merits of the tax dispute.
It held that the correct sequence is maintainability first and merits thereafter. Where the applicable statutory and administrative framework imposes a threshold condition upon departmental litigation, the Tribunal must examine that condition at the admission stage.
An arguable issue on merits cannot, by itself, neutralise a binding monetary-limit policy.
The Tribunal explained that monetary thresholds are intended not merely to reduce the number of cases but also to promote responsible allocation of judicial time, departmental resources, public money and institutional capacity.
The Tribunal held that the appeal was a departmental appeal governed by the applicable monetary-limit framework; the disputed amount of ₹1,98,806 was below ₹20 lakh; and the Revenue had failed to establish any recognised exception.
It further held that no specific, reasoned and legally cognisable exercise of the Commissioner’s residual power had been demonstrated. A mere assertion that the appeal was filed with the Commissioner’s approval could not substitute compliance with the litigation-control mechanism.
Accordingly, the GSTAT dismissed the departmental appeal at the threshold on the ground of the prescribed monetary limit and failure to establish an applicable exception.
Importantly, the Tribunal clarified that it had not examined or adjudicated upon the merits of the underlying tax dispute. The dismissal was confined to the maintainability of the departmental appeal under the applicable monetary-limit regime.
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.
