The Commissioner Goods And Service Tax Commissionerate vs. M/S Rajindra Auto Industries

Facts

The appeal was filed by the Commissioner, Goods and Services Tax Commissionerate, Ludhiana (appellant/revenue) against an order dated 12.04.2018 passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh. The CESTAT had allowed an appeal filed by M/s Rajindra Auto Industries (respondent/assessee). The respondent had challenged an order-in-original dated 23.04.2014, which demanded duty by invoking Rule 8(3A) of the Central Excise Rules, 2002. The respondent relied on the Gujarat High Court's decision in Indsur Global Ltd. vs. Union of India, which held Rule 8(3A) to be ultra vires. The appellant noted that the Gujarat High Court's decision was under challenge before the Supreme Court. Subsequently, the Supreme Court disposed of that appeal 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 dated 06.08.2024 advising against pursuing appeals with such low tax effects.

Held

The Court held that the appeal filed by the Department could not be justified for continuation in view of the low tax effect. The Court noted that in identical circumstances, the Supreme Court had dismissed Civil Appeal No. 6652 of 2018 as not pressed. The Court also took into account the departmental Circular dated 06.08.2024, which states that the Department shall not file or pursue appeals before High Courts where the tax effect involved is below Rs. 2 crore. The appellant's counsel was unable to distinguish the present case or provide instructions to withdraw the appeal, but could not justify its continuation on merits. The Court explicitly stated that the question of law involved was kept open for decision in appropriate proceedings. The appeal was disposed of on the basis of the low tax effect and the precedent set by the Supreme Court, without deciding the substantive issue of the validity of Rule 8(3A) of the Central Excise Rules, 2002.

Key Issues

1. Whether the appeal filed by the Department is maintainable and should be pursued on merits, given the low tax effect and the Supreme Court's disposal of a similar matter as not pressed? (Question of law and procedure, turning on the interpretation and applicability of departmental circulars and Supreme Court precedents). Petitioner/Appellant's Arguments: The appellant's counsel argued that as the vires of the provision were in question, they did not have instructions to withdraw the appeal. They were unable to point out any distinction in the present matter that would warrant a decision on merits, especially in light of the Circular dated 06.08.2024 and the Supreme Court's dismissal of Civil Appeal No. 6652 of 2018 in identical circumstances. Revenue/State's Arguments: The respondent's counsel submitted that the present appeal could not be pursued by the Department due to the low tax effect.