Year-wise tax effect governs departmental appeal maintainability; time-barred demand cannot be added to cross the monetary limit.

Departmental appeals governed by a monetary-limit instruction must be tested year-wise where the tax effect is assessed separately for each assessment year. A demand that is time-barred under the extended limitation framework in section 73(1) of the Finance Act, 1994 cannot be clubbed with valid demands from other years to satisfy the threshold for High Court maintainability. After excluding the barred component, the surviving tax effect fell below the prescribed limit, so the appeal could not be entertained on aggregation grounds and was dismissed.

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Issues: Whether the departmental appeal was maintainable in view of the monetary limit prescribed for High Court appeals, and whether the time-barred demand for one assessment year could be included to cross that limit.

Analysis: The appeal arose from a consolidated service tax demand covering four financial years. The notification issued to reduce government litigation fixed a monetary limit for High Court appeals, and the demand had to be examined year-wise because each assessment year constituted a separate unit for determining the tax effect. The demand for one year was held to be barred by limitation under the extended period framework in section 73(1) of the Finance Act, 1994, so that amount could not be counted. After excluding the time-barred component, the surviving demand fell below the prescribed threshold. The Court therefore held that the appeal could not be entertained merely by aggregating a barred demand with valid demands from other years.

Conclusion: The appeal was not maintainable and was dismissed in favour of the respondent.

Final Conclusion: The departmental challenge failed at the threshold on monetary-limit grounds, with the excluded time-barred year reducing the surviving tax effect below the appealable limit.

Ratio Decidendi: For departmental appeals governed by a monetary-limit instruction, tax effect must be assessed on a permissible year-wise basis, and a time-barred demand cannot be clubbed to satisfy the threshold for maintainability.

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