Tax Forum: Revised monetary limits for departmental appeals

QUESTION: Where the stakes involved are less than the prescribed monetary limits, no departmental appeal shall lie, a law which is now settled.

There is a recent circular liberalising the limits which you may like to share with your readers so that they can contest an appeal filed, where the disputed amount is below the monetary limits.

ANSWER: Instruction No.3 of 2011 dated February 9, 2011 replaces the earlier Instruction No.5 of 2008 dated May 15, 2008. The revised monetary limits are Rs.3 lakh for departmental appeals before the Tribunal, Rs.10 lakh for High Court and Rs.25 lakh for the Supreme Court.

But there are exceptions to this rule so that appeal can be filed even where the stakes are lower in case of such exceptions. The exceptions are: “(a) Where the constitutional validity of the provisions of an Act or Rule are under challenge, or (b) where Board's order, notification, instruction or circular has been held to be illegal or ultra vires, or (c) where revenue audit objection in the case has been accepted by the Department.”

There had been a dispute whether applicable limits are with reference to the date of appeal or would have application for all pending appeals so as to require the revised limits to be taken into consideration even on the date of hearing.

The instruction would provide that the revised limits would have application for appeals filed on or after February 9, 2011. It follows that appeals pending on this date would be governed only by earlier instructions.

This circular, therefore, steers clear of the pending dispute whether the instruction revising the limit would be applicable for all pending appeals.