Commissioner Of Central Excise & Customs vs. Heubach Colour PVT LTD

Facts

The Commissioner of Central Excise & Customs (Appellant) filed a Tax Appeal before the High Court of Gujarat at Ahmedabad against Heubach Colour Pvt Ltd (Opponent). The appeal was admitted and a substantial question of law was framed. However, the learned Senior Standing Counsel for the appellant sought permission to withdraw the appeal. This request was based on a communication received from the Joint Commissioner (L), Central GST & Central Excise, Vadodara-II, dated 20.07.2021. The reason for withdrawal was stated to be the low tax effect, in pursuance to CBIC's Instruction F.No. 390/Misc/116/2017-JC dated 22.08.2019.

Held

The Court permitted the withdrawal of the Tax Appeal as prayed for by the learned Senior Standing Counsel for the appellant. The Court explicitly stated that it was not expressing any opinion on the substantial question of law that had been framed at the time of admission of the appeal. The reasoning for permitting withdrawal was solely based on the appellant's submission regarding the low tax effect, in line with the CBIC's instructions. Consequently, the Tax Appeal was dismissed as withdrawn. The ratio decidendi is that High Courts may permit withdrawal of tax appeals based on administrative instructions concerning tax effect, without adjudicating the merits of the substantial question of law.

Key Issues

The Court had to decide whether to permit the withdrawal of the Tax Appeal. The appellant argued that the appeal should be withdrawn due to low tax effect, citing CBIC's Instruction F.No. 390/Misc/116/2017-JC dated 22.08.2019. The judgment does not record any specific arguments from the opponent. The primary issue revolved around the court's discretion to allow withdrawal of an appeal, particularly when a substantial question of law had been framed, based on administrative instructions regarding tax effect.