The Commissioner Goods & Service Tax Commissionerate, F-Block, Rishi Nagar, Ludhiana vs. M/S. B B F Home Care Products LTD., Village Khassi Kalan, Tajpur Road, Ludhiana

Facts

The appeal was filed by the Commissioner, Goods and Services Tax Commissionerate, Ludhiana, against an order dated January 23, 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 B.B.F. Home Care Products Ltd., Ludhiana. The respondent had challenged an order-in-original dated August 26, 2011, 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.

Held

The Court held that the appeal should not be continued due to the low tax effect, which was admittedly below Rs. 2 crores. This decision was influenced by the Supreme Court's disposal of Civil Appeal No. 6652 of 2018 (and connected appeals) as not pressed due to low tax effect, and by the Department's own Circular dated August 6, 2024, which states that appeals with a tax effect below Rs. 2 crore will not be filed or pursued before High Courts. Although the appellant's counsel submitted that the question of vires was involved and they had no instructions to withdraw, they could not point out any distinguishing feature in the present matter. The Court found no justification for continuing the proceedings in view of the low tax effect. The question of law involved was expressly kept open for decision in appropriate proceedings. The appeal was accordingly disposed of.

Key Issues

1. Whether the appeal filed by the Department should be pursued given the low tax effect, in light of the Supreme Court's disposal of similar matters and a departmental circular? (Mixed question of law and fact, concerning the applicability of Circular dated 06.08.2024 and the principle of not pursuing appeals with low tax effect). Petitioner (Department) arguments: The Department argued that while the vires of Rule 8(3A) were in question, they had no instructions to withdraw the appeal. However, they were unable to distinguish the present case from Civil Appeal No. 6652 of 2018, which was dismissed as not pressed due to low tax effect. They also noted that the present case is an appeal against a Tribunal order, not a writ petition. Respondent (M/s B.B.F. Home Care Products Ltd.) arguments: No arguments were recorded for the respondent as none appeared.