Summary
The Revenue contended that the increased monetary limit in CBDT Instruction No 3 of 2011 applied only to appeals filed after its issue. Resolving conflicting decisions, the Court held that the instruction also applied to pending matters, subject to the safeguards recognised by the three-judge Bench in Surya Herbal.
Issues
- Whether CBDT Instruction No 3 of 2011 applies to Revenue appeals already pending when it was issued.
- How the Surya Herbal safeguards and conflicting later two-judge orders affect that application.
Held
- The instruction raising the High Court appeal threshold to a tax effect of Rs 10 lakh applied to pending matters as well. The Court approved the litigation-policy reasoning in Ranka & Ranka: applying the beneficial measure only prospectively would frustrate reduction of unnecessary litigation and produce anomalous treatment. (¶¶ 5, 12–13, 23–25)
- Surya Herbal’s three-judge order held the field. The circular must not be applied automatically where the matter has a cascading effect or where a common principle is involved in subsequent groups or a large number of matters; the Department can draw such circumstances to the High Court’s attention. (¶¶ 19–20, 25)
- Later two-judge orders in Suman Dhamija and Gemini Distilleries had been made without the earlier three-judge order being brought to notice. They did not displace its controlling position; the Department had a duty to bring it to the Court’s attention. (¶¶ 21–22, 25)
Result
Revenue appeals dismissed. Instruction No 3 of 2011 applies to pending matters, subject to the two Surya Herbal caveats.