The Gauhati High Court dismissed the Commissioner's appeal against an assessee, ruling it non-maintainable because, after discarding a time-barred demand for 2014-2015, the remaining tax claim fell just below the Rs. 2 crore threshold required for High Court litigation.
Khushi Jain | Apr 30, 2026 |
High Court: Multi-Year Service Tax Demands Cannot Be Clubbed to Cross Rs. 2 Crore Appeal Threshold
The CGST Authority issued a consolidated Show-Cause Notice dated 31.12.2020 demanding Service Tax from M/s Rishu Enterprise for four assessment years, 2014-15 to 2017-18. The demand of a total of Rs. 26,099,364/- was based primarily on Form 26AS records and audited financial statements, as the respondent failed to provide specific work orders or payment vouchers.
The CESTAT, Kolkata, ruled that the service tax demand was unsustainable because it was based solely on Form 26AS and improperly invoked the extended period of limitation. The CGST Authority appealed this decision to the High Court. During the proceedings, a preliminary objection was raised regarding the maintainability of the appeal based on a Ministry of Finance notification dated 06.08.2024, which set a minimum monetary limit of Rs. 2 crore for filing appeals in high courts.
Issue of the Case
1. Whether the appeal is maintainable under the 06.08.2024 notification, considering that while the total consolidated demand exceeds Rs. 2 crore, the demand for each individual assessment year is less than Rs. 2 crore?
2. Whether the Service Tax demand for any of the assessment years is barred by the limitation period specified in Section 73(1) of the Finance Act, 1994.
Decision of the Court
The High Court decided that the Service Tax demand for the 2014-15 assessment year was barred by limitation under Section 73(1) of the Finance Act, 1994. Consequently, after excluding this time-barred amount of Rs. 6,199,462/-, the remaining valid demand total was Rs. 19,899,902/-, which fell below the Rs. 2 crore threshold required for filing an appeal under the 06.08.2024 notification. Accordingly, the Court held that the appeal was not maintainable and dismissed it on these grounds.
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