Supreme Court Clarifies that ₹2 Crore GST Litigation Limit Covers Existing Appeals Also
Background of the Dispute
In Commissioner of Commercial Tax & Ors. Vs Vikaram Cement (Supreme Court of India), the Supreme Court examined whether the monetary limits laid down in Circular No. 207/1/2024-GST dated 26.06.2024 issued by the Central Board of Indirect Taxes and Customs (CBIC) would extend not only to fresh appeals but also to appeals already pending before the Court.
The controversy reached the Supreme Court from a Full Bench judgment of the High Court of Madhya Pradesh at Indore, which had quashed reassessment proceedings initiated under Section 19(1) of the Madhya Pradesh General Sales Tax Act, 1958 on the ground of limitation. The State authorities challenged that High Court decision before the Supreme Court.
However, the tax amount in dispute before the Supreme Court was ₹25,47,448, which is lower than the monetary limit of ₹2,00,00,000 prescribed in the CBIC Circular for filing or pursuing appeals before the Supreme Court. This gave rise to a preliminary issue: whether the Revenue could lawfully continue to press its appeals despite this threshold.
Key Facts Leading up to the Appeal
To understand the context, it is useful to trace the sequence of events recorded in the order:
- The assessee was registered under the Madhya Pradesh General Sales Tax Act, 1958 and was assessed for the period 01.04.1987 to 31.03.1988.
- On 19.03.1991, an additional tax demand of ₹41,062 was raised.
- The assessee filed an appeal, arguing primarily that there had been a breach of the principles of natural justice because certain declarations in Form B-2 had not been permitted to be furnished during the assessment.
- By order dated 20.05.1992, the Appellate Authority set aside the assessment order dated 19.03.1991 and remanded the matter to the Assessing Authority, directing that the assessee be given reasonable opportunity to submit Form B and the relevant declaration forms.
- On remand, the Assessing Authority passed a fresh assessment order on 26.10.1994, after considering the declarations in Form B-2.
- Approximately three years later, on 26.03.1997, a notice under
Section 19(1)of the Madhya Pradesh General Sales Tax Act, 1958 was issued initiating reassessment of the assessee’s liability. Subsequently, an order dated 26.12.1998 was passed, assessing the assessee’s liability at ₹25,47,448. - The assessee’s appeal against the reassessment order, inter alia on the ground that it was time-barred, was dismissed on 09.09.2002.
- A Revision Petition filed against the appellate order met the same fate and was dismissed on 02.07.2003.
- The assessee then approached the High Court by filing Writ Petition No. 9506 of 2003. A Full Bench of the Madhya Pradesh High Court, taking note of conflicting precedents, held that the reassessment proceedings initiated by notice dated 23.03.1997 were beyond the period of limitation. Accordingly, the reassessment notice and consequential proceedings were quashed. The Full Bench also held that the original assessment order did not wholly merge into the Appellate Authority’s order dated 20.05.1992, as that appellate order was confined to granting an opportunity for filing declarations in Form B-2 and Appendix declarations.
Aggrieved by this decision, the State authorities filed appeals before the Supreme Court.