Commissioner Goods And Services Tax Commissionerate vs. M/S Ekam Enterprises Ludhiana

Facts

The appeal was filed by the Commissioner, Goods and Services Tax Commissionerate, Ludhiana (appellant/Department) against an order dated April 11, 2018, passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh. The CESTAT had allowed an appeal filed by M/s Ekam Enterprises, Ludhiana (respondent). The respondent had challenged an order-in-original dated February 6, 2013, which demanded duty by invoking Rule 8(3A) of the Central Excise Rules, 2002. The respondent's challenge was based on a Gujarat High Court decision holding Rule 8(3A) ultra vires. The Department noted that the Gujarat High Court's decision was under challenge before the Supreme Court. Subsequently, the Supreme Court disposed of similar appeals as 'not pressed' due to low tax effect. The present appeal also involved a tax effect below Rs. 2 crores, aligning with a Departmental Circular dated August 6, 2024, which stated that appeals with a tax effect below Rs. 2 crores would not be pursued.

Held

The Court held that the appeal should be disposed of as not pressed, in line with the Supreme Court's decision in similar cases and the Department's own circular dated August 6, 2024, which directs against pursuing appeals with a tax effect below Rs. 2 crores. The appellant's counsel was unable to provide any distinguishing facts or arguments to justify continuing the appeal on merits, despite the question of vires being raised. The Court noted that the present case was an appeal against a Tribunal order, not a writ petition. While the appeal was disposed of, the Court explicitly kept the question of law concerning the vires of Rule 8(3A) of the Central Excise Rules, 2002, open for decision in future appropriate proceedings. No specific operative directions were issued other than disposing of the appeal.

Key Issues

1. Whether the appeal filed by the Department should be dismissed as not pressed in light of the Supreme Court's disposal of similar matters and the Department's own circular regarding low tax effect? The appellant argued that while the CESTAT had allowed the respondent's appeal based on the Gujarat High Court's decision, the Supreme Court had disposed of similar matters as not pressed. The appellant's counsel acknowledged the circular regarding low tax effect but stated she had no instructions to withdraw the appeal, as the vires of the provision were in question. However, she could not distinguish the present case from those dismissed by the Supreme Court. The respondent did not appear before the High Court. 2. Whether the question of law regarding the vires of Rule 8(3A) of the Central Excise Rules, 2002, should be kept open for decision in appropriate proceedings? The appellant's counsel indicated an inability to withdraw the appeal due to the question of vires, but conceded she could not point out any distinction warranting a decision on merits given the low tax effect and the Supreme Court's precedent. The Court acknowledged the importance of the question of law but considered the circumstances of the present appeal.