CBDT monetary-limit rules bar low-tax-effect appeals unless the Department shows a recurring or important legal question.

CBDT monetary-limit instructions restrict the Revenue from filing appeals where the tax effect is below the prescribed threshold, subject to an exception for substantial or recurring questions of law. The Department cannot ignore the binding circular and pursue such an appeal as a routine matter. If it contends that a case falls within the exception, it must place that claim before the appellate forum so the matter can be considered on merits. The operative effect is that low-tax-effect appeals are barred unless the Department establishes that the case fits the circular's stated exception.

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Issues: Whether the Revenue's appeal could be dismissed solely on the basis of the monetary limit prescribed by the CBDT circulars, and whether cases falling within the stated exception of recurring or important questions of law still required consideration on merits.

Analysis: The monetary-limit circular issued by the CBDT, as modified by Instruction No. 5 of 2007, restrained the Department from filing appeals where the tax effect was below the prescribed limit, but carved out an exception for cases involving substantial questions of law of importance or questions likely to recur. The Court followed its earlier view that, so far as the Department is concerned, it cannot ignore the binding circular and pursue an appeal below the threshold merely as a matter of course. At the same time, where the Department claims that a case falls within the exception, it must place that aspect before the appellate forum so that the matter can be considered on merits.

Conclusion: The Revenue's appeal could not be maintained contrary to the CBDT's monetary-limit instructions, and the question was answered against the Department. The Department was, however, left free to demonstrate that a given case falls within the exception carved out by the circular.

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