2026-VIL-47-GSTAT-KLK
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SGST Tribunal

GST - Monetary threshold for filing appeal before GSTAT - CBIC Circular No. 207/1/2024-GST dated 26.06.2024 fixing monetary limit of Rs.20,00,000/- for filing appeals - The Appellant-Revenue preferred three consolidated appeals against the Respondent-taxpayer. The Respondent contended that the appeal was barred by the monetary limit fixed by the CBIC Circular No.207/1/2024-GST – Whether such circular is binding on the Tribunal and whether appeal is maintainable when individual appeal amount is less than threshold but total amount in composite order exceeds threshold - HELD - While CBIC Circular has statutory force and binds the officers of Central tax under Section 120(1) and Section 168(1) of CGST Act, 2017, such Circular does not have binding effect on the Tribunal itself and has only persuasive role – Further, paragraph 3 clause (viii) of the Circular provides that when a composite order disposes of more than one appeal, the monetary limit shall apply on the total amount of tax, interest, penalty and late fee, and not on individual appeals. The exclusion clause in paragraph 4 clause (iv) provides that matters involving interpretation of provisions of the Act or the Rules or interpretation of Notifications or Circulars are excluded from the monetary limit. The composite order disposed of three appeals and taken together the total amount involved exceeded the monetary limit. The matter involved interpretation regarding retrospective applicability of an amended Rule. Therefore the appeal is maintainable and not barred by the monetary limit - Retrospective applicability of amendment to Rule 43 of CGST Rules excluding duty credit scrips from exempt supplies for ITC reversal purposes - Revenue sought reversal of ITC on sale of duty credit scrips for years 2017-20. The Respondent contended that the amendment to Rule 43 excluding value of supply of duty credit scrips from aggregate exempt supplies should be given retrospective effect - Whether amendment effected by Notification No.14 of 2022 dated 05.07.2022 inserting clause (d) in Explanation 1 to Rule 43 should apply retrospectively to transactions made in financial years 2017-20 – HELD - The duty credit scrips were incorporated as exempt supply vide Notification No.35 of 2017 dated 13.10.2017. At that time benefit of exclusion from aggregate exempt supplies was not available. Four years later in 2022 the Government inserted clause (d) in Explanation 1 to Rule 43 with prospective effect from 05.07.2022. From the language of Explanation 1 and clause (d), it cannot be presumed that the provision was inserted in the Rule to clarify doubts or any kind of ambiguities in the provision - The Rule framer possessed power under Section 164(3) of CGST Act to give retrospective effect but intentionally chose prospective application. Input Tax Credit being concessional in nature cannot be allowed as a vested right from retrospective date. The amendment was not clarificatory or curative in nature but was intended to provide benefit prospectively only. The First Appellate Authority was not correct in applying the said amendment in Rule 43 retrospectively in favour of the taxpayer - The amendment shall not be applied retrospectively and the Respondent-assessee is not entitled to benefit of amendment for transactions prior to 05.07.2022 - The issue is answered in favour of Revenue and against the assessee - Invocation of Section 74(1) of CGST Act, 2017 for wrongly availing Input Tax Credit - Requirement of fraud or wilful misstatement or suppression of facts to evade tax - Whether revenue can invoke Section 74(1) for availing ITC on exempt supplies without specific material evidence - The Respondent contended that there was no fraud or suppression as he had disclosed turnover regularly and submitted invoices – HELD - The Section 74(1) can be invoked only where there is fraud or wilful misstatement or suppression of facts to evade tax. The term suppression must be construed strictly and does not mean any omission but must be deliberate and wilful to evade payment of tax - In the present case, Respondent regularly filed monthly returns in GSTR Form-3B and annual returns and disclosed position. He submitted invoices of sale of duty credit scrips. No investigation was carried out and no material evidence was brought to establish fraud or wilful suppression. Respondent cannot be accused of suppression when both Respondent and department were aware that duty credit scrips were supplied – Further, as per CBIC Instruction No.05/2023-GST dated 13.12.2023, Section 74(1) can be invoked only when investigation indicates material evidence of fraud or wilful misstatement or suppression of fact to evade tax. Show-cause notice issued under Section 74(1) is not sustainable - The proper officer shall determine tax liability under Section 73 of CGST Act instead within statutory period after providing opportunity of hearing to the Respondent.
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