Principal Commissioner, Goods And Service Tax Commissionerate, Ludhiana vs. M/S. Bbf Home Care Products LTD

Facts

The appellant, the Principal Commissioner of GST, Ludhiana, filed an appeal against an order dated 02.11.2018 passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). The CESTAT had allowed an appeal filed by the respondent, M/s B.B.F. Home Care Products Ltd. The respondent had challenged an order-in-original dated 16.03.2011, 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 had previously challenged the Gujarat High Court's decision before the Supreme Court. The Supreme Court disposed of those appeals as not pressed due to low tax effect. The current appeal also involves a tax effect admittedly lower than Rs. 2 crores, aligning with a departmental circular dated 06.08.2024, which states that appeals with a tax effect below Rs. 2 crores will not be filed or pursued.

Held

The Court held that the appeal should be disposed of as not pressed due to the low tax effect, which was admittedly below Rs. 2 crores. The Court noted that the Supreme Court had disposed of Civil Appeal No. 6652 of 2018, which involved similar circumstances and the same legal issue, as not pressed. The Court also referred to its own circular dated 06.08.2024, which mandates that appeals with a tax effect below Rs. 2 crores should not be pursued. Although the appellant's counsel argued that the question of vires prevented withdrawal, they could not demonstrate any distinguishing features in the present case that warranted a decision on merits. The Court emphasized that this was an appeal against a Tribunal order, not a writ petition, and found no justification for continuing the proceedings given the low tax effect. However, the Court explicitly kept the question of law involved open for decision in appropriate proceedings. The appeal was accordingly disposed of.

Key Issues

1. Whether the appeal filed by the Department should be dismissed as not pressed in light of the low tax effect, considering the departmental circular dated 06.08.2024 and the Supreme Court's disposal of similar matters. Contentions of the Appellant (Department): The appellant's counsel argued that as the vires of Rule 8(3A) of the Central Excise Rules, 2002 were in question, they did not have instructions to withdraw the appeal. However, they were unable to distinguish the present matter from the Supreme Court's disposed appeals or provide grounds for a decision on merits in view of the circular. Contentions of the Respondent: None for the respondent. The respondent had previously succeeded before the CESTAT based on the Gujarat High Court's ruling that Rule 8(3A) was ultra vires.