The Principal Commissioner Goods And Service Tax Commissionerate Ludhiana vs. M/S Twinkle Papers PVT. LTD. Sangrur

Facts

The appellant, the Principal Commissioner of GST, Ludhiana, filed an appeal against an order dated 13.12.2018 passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh. The CESTAT had allowed an appeal filed by the respondent, M/s Twinkle Papers Pvt. Ltd. The respondent had challenged an order-in-original dated 24.12.2014, 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) as ultra vires. The Department noted that the Gujarat High Court's decision was under challenge before the Supreme Court, but the Supreme Court had disposed of similar appeals as not pressed due to low tax effect. The tax effect in the present appeal was also stated to be below Rs. 2 crores, aligning with a departmental circular advising against pursuing appeals with such low tax effects.

Held

The High Court held that the appeal should not be continued in view of the low tax effect, which was admittedly below Rs. 2 crores. The Court noted that similar appeals before the Supreme Court, involving the same legal issue regarding the vires of Rule 8(3A) of the Central Excise Rules, 2002, had been disposed of as not pressed due to low tax effect. The Court also referred to its own Circular dated 06.08.2024, which advises against pursuing appeals with a tax effect below Rs. 2 crores. Although the appellant's counsel submitted that the question of vires was involved and she had no instructions to withdraw, the Court found no distinction in the present matter that warranted a decision on merits, especially in light of the Supreme Court's approach and the departmental circular. The Court acknowledged that the present case was an appeal against a Tribunal order, not a writ petition. Consequently, the Court found no justification for the continuation of the proceedings. However, the question of law involved was expressly kept open for decision in appropriate proceedings. The appeal was disposed of on this basis.

Key Issues

1. Whether the appeal filed by the Department should be pursued and decided on merits, notwithstanding the low tax effect involved, considering that the vires of Rule 8(3A) of the Central Excise Rules, 2002 are in question? Petitioner's contentions: The appellant argued that although the vires of Rule 8(3A) were in question, and a Gujarat High Court decision holding it ultra vires was under challenge before the Supreme Court, the present appeal should not be dismissed solely on the ground of low tax effect. The appellant's counsel stated she had no instructions to withdraw the appeal, implying a desire to have the legal question decided. The appellant also noted that the present case is an appeal challenging a Tribunal order, not a writ petition. Revenue's contentions: The respondent (M/s Twinkle Papers Pvt. Ltd.) did not appear. The Department (appellant) brought to the court's notice a Supreme Court decision where similar appeals were disposed of as not pressed due to low tax effect. The Department also referred to its own Circular dated 06.08.2024, which states that appeals with a tax effect below Rs. 2 crores will not be filed or pursued before High Courts. The Department argued that in identical circumstances, the Supreme Court had dismissed appeals as not pressed.