Are the CBIC Circulars not binding on the tax officials. ?.

The CBIC has issued the circular bearing number 207/01/2024 on 26/06/2024 (even before operationalization of the benches of GSTAT) prescribing monetary limit of Rs. 20 lakhs for filing an appeal before the GSTAT. We had already come across few cases where the second appeal preferred by the tax officials were dismissed exclusively on the reason that monetary limit set by CBIC are not followed and there are no proper justifications for preferring the appeal under exceptions permissible under the above circular.

It appears that irrespective of the fact as to whether the monetary limit is adequate or not and also when limit is not adequate, whether the exceptional situations are applicable or not, the second appeal seems to be filed by tax officials in a mechanical as well as routine manner as is evident from Ashok Kumar Singh Versus M/s. Safecon Lifesciences Private Limited. - 2026 (10) TMI 1292 - GSTAT AGRA.

Despite the availability with the buyer of purchase invoice, proof for movement of goods, proof for sale and also the proof for payment to supplier through proper banking channels, the adjudication officer invoked Section 74 and denied ITC of 3,83,400, imposed equal penalty along with applicable interest as well. The buyer preferred the first appeal which stood allowed on 23/11/2022. The OIA was passed by providing opportunity to the respondent to reply on submissions made by the buyer taxpayer. Due to the sole reason that the supplier at some point of time did not have the registration, which also stood restored subsequently, a genuine buyer was harassed by the tax officials for the fault of the supplier in some other cases.

The bench of the GSTAT was magnanimous to both taxpayer as well as tax official as the second appeal was dismissed and the order in appeal was upheld. From the taxpayer perspective, still he is a looser only as for no fault of him, he had to cross four stages as SCN, OIO, OIA and GSTAT just to prove that a genuine ITC is genuine only.

See the tax official side. The SCN could have been avoided had they gone through the documents of the buyer. Injustice was done to the taxpayer as evident from OIA as well as Tribunal order. In my view, it is a fit case for imposition of cost on the adjudication officer for the following reasons. 01) For no fault of the buyer, due to lack of understanding by the tax official, the tax payer was made to suffer. 02) The total demand including unjustified penalty as well as interest worked out to Rs. 8,20,476 only as against the monetary limit prescribed by CBIC of Rs. 20,00,000/. 03) There was no suppression, intent to evade tax or wilful- misstatement to attract section 74, which was improperly invoked. 04) It was argued before the bench by the counsel of Revenue that additional records were submitted at first appeal level by the taxpayer and the same was admitted without the opportunity to Revenue, whereas, the facts as available in the GSTAT order reveals that the jurisdictional adjudication officer has seen the additional documents and also furnished his observations which are readily available on record. Despite the above serious shortcoming on revenue side, the OIA was accepted and second appeal was dismissed without imposition any cost.

In case the taxpayer commits a mistake, he has to face this. In case an officer commits a mistake, then also the concerned taxpayer has to face this. Is this justified?. It is my suggestion to all authorized representatives representing taxpayers to insist on appropriate imposition of cost on the erring tax officials which shall help to improve the quality of adjudication.

The operative portion of the order is as below. 29-In view of the foregoing discussion, and having regard to the facts and circumstances of the present case, we are of the considered opinion that allowance of the input tax credit on the purchases from M/S Neon Pharma Chem is completely justified and Revenue has failed to establish sufficient grounds for interference with the impugned appellate order dated payer.

30- Consequently, this second appeal fails and dismissed as found to be devoid of merit. Order in appeal is upheld.

31- No order as to cost.

Conclusion: It is heartening to note that as I conclude this write up on 22/10/2026, a total number of 95,483 e appeals have been filed in the GSTAT E portal and 9,972 appeals stand admitted for hearing before the bench. 529 final orders have been passed so far by the various benches of the GSTAT till now. Accordingly, the benches have started to pass unbiased orders and now it is the turn of adjudication officers as well as first appellate authority to pass orders in such a manner that either the order attains finality as no second appeal is filed or order is sustained in the Second appeal. As and when any OIO or OIA is set aside or quashed by a compete Tribunal or High Court, the erring tax official who has passed such improper order must be made accountable for passing such order.

This is going to happen for certain as the 57th GST Council meeting approved several proposals which are being implemented in a phased manner. During the last three months, several issues are getting settled at supreme Court, High Court as well as GSTAT. The field formation must update themselves on all these latest legal developments to avoid their order being quashed at a later date which is certainly a black mark on the officer who has passed such improper order. The agenda for tax officials.

01)There are no more improper invocation of section 74.

02) No demand based on tax head mismatch.

03) No OIO without the opportunity of personal hearing.

04) Reasonable time gap of minimum 75 days between SCN date and OIO date.

05) No more portal only uploading of SCN, in all cases where no reply to SCN is received.

All the above measures are suggested in the interest of tax officials only.