Section 120 of the Central Goods and Services Tax Act, 2017 deals with monetary limits for filing appeals or applications by officers of central tax under the GST appellate framework.
The provision gives the Board power, on the recommendations of the GST Council, to issue orders, instructions or directions fixing monetary limits for regulating when a central tax officer should file an appeal or application under Chapter XVIII of the CGST Act.
The purpose of Section 120 is to help regulate departmental litigation and avoid filing appeals in matters involving amounts below prescribed monetary thresholds. At the same time, the section makes it clear that a decision not to file an appeal in one case because of the monetary limit does not prevent the department from filing an appeal in another case involving the same or similar issue.
Section 120 is therefore primarily concerned with departmental appeals and applications, rather than restricting the statutory appeal rights of taxpayers. The current CGST Act contains four sub-sections under Section 120.
What Is Section 120 of the CGST Act?
Section 120 is titled “Appeal not to be filed in certain cases.”
The provision contains four important rules:
- The Board may fix monetary limits for departmental appeals or applications.
- Non-filing of an appeal because of those limits does not prevent the department from filing an appeal in another case involving the same or similar issue or question of law.
- A taxpayer cannot argue that the department accepted a disputed decision merely because the department did not appeal due to the monetary limit.
- The Appellate Tribunal or court must have regard to the circumstances in which the department did not file the appeal.
Why Was Section 120 Introduced?
GST disputes can travel through several levels of appeal:
- Appellate Authority;
- GST Appellate Tribunal;
- High Court; and
- Supreme Court.
If the tax administration were required to contest every order regardless of the amount involved, a large number of relatively small disputes could generate additional litigation.
Section 120 provides a statutory mechanism through which the Board can prescribe monetary limits for departmental litigation.
This supports the broader objective of managing government litigation and focusing departmental resources on matters that warrant further challenge.
CBIC’s Circular No. 207/1/2024-GST, dated 26 June 2024, specifically states that the monetary limits were introduced as part of the government’s litigation-reduction approach.
Section 120(1) – Power to Fix Monetary Limits
Section 120(1) provides that the Board, on the recommendations of the GST Council, may from time to time issue:
- orders;
- instructions; or
- directions
fixing monetary limits for regulating the filing of appeals or applications by officers of central tax under the provisions of Chapter XVIII.
This is the enabling provision under which the Board can establish departmental litigation thresholds.
Who Is Covered?
The provision specifically concerns an officer of central tax.
Therefore, Section 120 is principally a mechanism for regulating litigation initiated by the Central Tax Department.
It does not say that a taxpayer cannot file an appeal merely because the disputed amount is below a departmental monetary limit.
Current Monetary Limits for Central Tax Department Appeals
Pursuant to Section 120(1), CBIC issued Circular No. 207/1/2024-GST on 26 June 2024.
The circular fixed the following monetary limits for departmental appeals or applications:
| Appellate forum | Monetary limit |
|---|---|
| GST Appellate Tribunal (GSTAT) | ₹20 lakh |
| High Court | ₹1 crore |
| Supreme Court | ₹2 crore |
These limits apply to appeals or applications by Central Tax officers, subject to the exclusions and other conditions specified in the circular.
The circular was issued under Section 120 read with Section 168 of the CGST Act, on the recommendations of the GST Council.
What Does the Monetary Limit Mean?
The monetary limit is a threshold for departmental litigation.
For example, if the disputed amount falls below the applicable departmental threshold, the Central Tax Department ordinarily should not file an appeal at that forum under the circular, subject to the specified exclusions.
This does not mean that the underlying order automatically becomes legally correct.
It also does not mean that the taxpayer loses a right of appeal.
The monetary limits regulate the department’s decision to pursue litigation.
Example of the GSTAT Limit
Suppose a Central Tax order involves a disputed tax amount of ₹12 lakh.
The applicable departmental monetary limit for filing an appeal before GSTAT under Circular No. 207/1/2024-GST is ₹20 lakh.
Subject to the exclusions in the circular, the department would ordinarily not file an appeal before GSTAT solely because the amount is below the prescribed limit.
This does not prevent the taxpayer from exercising any appeal right available to the taxpayer under the CGST Act.
Example of the High Court Limit
Suppose a matter involving Central Tax has a disputed amount of ₹75 lakh.
The departmental monetary limit for filing an appeal before the High Court is ₹1 crore.
Subject to the circular’s exclusions and other conditions, the department ordinarily would not pursue the High Court appeal merely because the amount is ₹75 lakh.
Example of the Supreme Court Limit
The current departmental monetary limit specified by CBIC for filing an appeal or Special Leave Petition before the Supreme Court is ₹2 crore.
Therefore, where the disputed amount is below ₹2 crore, the department ordinarily does not file the matter before the Supreme Court solely on monetary grounds, subject to the exclusions specified by the Board.
Section 120(2) – Non-Filing in One Case Does Not Prevent Appeal in Another
Section 120(2) contains an important safeguard.
Where a Central Tax officer does not file an appeal or application because of the orders, instructions or directions issued under Section 120(1), that does not prevent the officer from filing an appeal or application in another case involving:
- the same issue;
- a similar issue; or
- the same or similar question of law.
This is important because otherwise a taxpayer could argue that the department’s failure to appeal in one low-value matter means that the department has accepted the legal interpretation generally.
Section 120(2) prevents such an inference.
Example – Same Legal Issue, Different Amount
Suppose Case A involves a disputed tax amount of ₹10 lakh.
The department does not appeal because the amount is below the prescribed GSTAT monetary limit.
Later, Case B involves the same legal issue but a disputed amount of ₹50 lakh.
The department is not prevented by Section 120 from filing an appeal in Case B merely because it did not appeal in Case A.
The reason for non-filing in Case A was the applicable monetary threshold, not necessarily acceptance of the legal decision.
Section 120(3) – No Acquiescence by the Department
Section 120(3) provides another important protection for the department.
Even where the Central Tax officer does not file an appeal because of the monetary limits, a party to the appeal or application cannot argue that the officer has acquiesced in the decision merely because an appeal was not filed.
In simple terms:
No departmental appeal ≠ automatic acceptance of the legal issue.
This is particularly important where a taxpayer attempts to rely on a previous order as evidence that the department has accepted a particular interpretation.
What Is Acquiescence?
Acquiescence generally refers to acceptance or implied agreement with a decision through conduct.
Section 120(3) prevents a taxpayer from automatically treating the department’s non-filing of an appeal as evidence that the department accepted the decision.
The department may have decided not to appeal because the amount involved was below the prescribed litigation threshold.
Therefore, non-filing alone does not establish acceptance of the legal position.
Section 120(4) – Tribunal or Court Must Consider the Circumstances
Section 120(4) provides that the Appellate Tribunal or court hearing an appeal or application shall have regard to the circumstances under which the Central Tax officer did not file an appeal pursuant to the orders, instructions or directions issued under Section 120(1).
This reinforces the distinction between:
- a decision being accepted on merits; and
- an appeal not being filed because of the departmental litigation policy.
How Is the Amount Involved Calculated?
CBIC Circular No. 207/1/2024-GST provides specific principles for determining whether a case falls within the monetary limits.
Dispute Involving Tax
Where the dispute concerns a tax demand, the aggregate disputed tax amount is considered.
The circular specifies that this includes:
- CGST;
- SGST/UTGST;
- IGST; and
- Compensation Cess.
Only the disputed tax amount is considered for applying the monetary limit where the dispute involves tax along with penalty and/or interest.
Dispute Involving Interest Only
If the dispute concerns only interest, the amount of disputed interest is considered for determining whether the monetary limit is crossed.
Dispute Involving Penalty Only
Where the dispute concerns only a penalty, the disputed penalty amount is considered.
Dispute Involving Late Fee Only
Where the dispute relates only to late fee, the disputed late fee is considered for applying the monetary limit.
Interest, Penalty and Late Fee Without Tax
Where the dispute involves interest, penalty and/or late fee but does not involve any disputed tax amount, the aggregate amount of the disputed interest, penalty and late fee is considered.
Erroneous Refund
In cases involving an erroneous refund, the amount of refund in dispute is considered.
The circular specifically includes:
- CGST;
- SGST/UTGST;
- IGST; and
- Compensation Cess
while determining the disputed refund amount.
Composite Orders
A composite order may dispose of more than one appeal or demand notice.
CBIC’s 2024 circular provides that, for applying the monetary limits, the relevant amount in a composite order is considered on the total amount involved, rather than separately for each individual appeal or demand notice.
Example
Suppose a composite order covers three disputes:
- ₹8 lakh;
- ₹7 lakh; and
- ₹10 lakh.
The total disputed amount is ₹25 lakh.
For purposes of the circular’s monetary-limit framework, the total amount is considered rather than treating every component as an entirely separate matter.
Exceptions to the Monetary Limits
The monetary limits are not absolute.
CBIC Circular No. 207/1/2024-GST identifies specific circumstances where the decision to file an appeal is to be taken on merits irrespective of the monetary limit.
Important exclusions include cases involving:
1. Constitutional Validity
Where a provision of:
- the CGST Act;
- SGST/UTGST Act;
- IGST Act; or
- GST (Compensation to States) Act
has been held to be ultra vires the Constitution of India, the monetary limits do not prevent the department from considering an appeal on merits.
2. Rules or Regulations Held Ultra Vires
The exclusion also covers cases where rules or regulations made under the relevant GST legislation have been held to be ultra vires the parent Act.
3. Government Orders, Notifications or Circulars Held Ultra Vires
The monetary threshold does not control cases where an order, notification, instruction or circular issued by the Government or Board has been held to be ultra vires the applicable GST law or rules.
4. Recurring or Interpretative Issues
The circular identifies matters relating to:
- valuation;
- classification;
- refunds;
- place of supply; and
- other recurring issues involving interpretation of the Act, Rules, notifications, circulars, orders or instructions.
These matters may be pursued on merits regardless of the monetary threshold.
5. Adverse Judicial Comments
Cases where strictures or adverse comments have been made, or costs have been imposed, against the Government, department or its officers are also listed among the exclusions.
6. Other Cases Considered Necessary
The Board may consider other cases or classes of cases where it considers that contesting the matter is necessary in the interest of justice or revenue.
Monetary Limit Does Not Mean Every Higher-Value Case Must Be Appealed
An important clarification in CBIC Circular No. 207/1/2024-GST is that an appeal should not be filed merely because the disputed amount exceeds the monetary limit.
The decision to file an appeal must still be taken on the merits of the case.
The circular specifically directs officers to consider the objective of reducing unnecessary litigation and providing certainty to taxpayers while deciding whether to file an appeal.
Therefore, the monetary limit is not an automatic instruction that every case above the threshold must be litigated.
It is a threshold for regulating departmental litigation, subject to consideration of the merits and applicable exclusions.
Section 120 and Taxpayer Appeals
Section 120 primarily regulates appeals or applications by officers of central tax.
A taxpayer’s right to appeal under the applicable provisions is not automatically removed because the disputed amount is below the monetary limits prescribed for departmental appeals.
For example, if a taxpayer has a statutory right to challenge an order before the Appellate Tribunal, Section 120 does not itself prohibit the taxpayer from doing so merely because the department would be restricted from filing its own appeal below the departmental threshold.
This distinction is important:
Departmental monetary limit ≠ taxpayer appeal limitation.
Section 120 and Section 107
Section 107 deals with appeals to the Appellate Authority.
Section 120 does not replace Section 107.
Instead, Section 120 operates at the departmental litigation-policy level and regulates whether a Central Tax officer should pursue an appeal or application under the relevant appellate provisions.
The taxpayer’s statutory appeal rights continue to be governed by the relevant provisions of the CGST Act.
Section 120 and Section 112
Section 112 deals with appeals to the Appellate Tribunal.
Section 120 is particularly relevant to departmental appeals because it allows the Board to prescribe monetary thresholds for Central Tax officers pursuing appeals before GSTAT.
CBIC’s 2024 circular currently specifies a ₹20 lakh monetary limit for departmental appeals before GSTAT, subject to the stated exclusions.
Section 120 and Section 117
Section 117 deals with appeals to the High Court.
Section 120 regulates departmental litigation at that level through the monetary limit fixed by the Board.
Under CBIC Circular No. 207/1/2024-GST, the monetary limit for departmental appeals before the High Court is ₹1 crore, subject to the exclusions specified in the circular.
Section 120 and Section 118
Section 118 deals with appeals to the Supreme Court.
Section 120 allows the Board to regulate departmental litigation at the Supreme Court level through monetary limits.
Under Circular No. 207/1/2024-GST, the current monetary limit for Central Tax appeals or Special Leave Petitions before the Supreme Court is ₹2 crore, subject to the exclusions in the circular.
Section 120 and Judicial Precedent
One of the most important practical effects of Section 120 is that a departmental decision not to appeal does not necessarily mean that the underlying decision becomes a departmental precedent.
CBIC’s 2024 circular expressly states that cases where appeal is not filed because the amount is below the monetary limit do not have precedent value merely for that reason.
Example
Suppose a GSTAT order decides an issue against the department.
The disputed amount is ₹10 lakh, which is below the applicable ₹20 lakh GSTAT departmental threshold.
The department does not file an appeal.
A different taxpayer cannot automatically argue:
“The department accepted that GSTAT interpretation because it did not appeal.”
Section 120(3) and the CBIC circular specifically prevent that conclusion merely from non-filing based on the monetary limit.
What If a Later Case Has a Higher Tax Amount?
Suppose the department did not challenge an order in an earlier case because the disputed amount was below the applicable monetary threshold.
A later case involving the same legal issue may involve a substantially higher amount.
Section 120(2) makes it clear that the department is not prevented from filing an appeal or application in the later case.
Therefore, a taxpayer cannot rely solely on the earlier non-filing to argue that the department is permanently barred from contesting the issue.
Importance of Section 120 for Government Litigation
Section 120 is part of the broader framework for managing tax litigation.
It helps the department distinguish between:
- cases where litigation may not be pursued because of the amount involved; and
- cases where an issue has sufficient legal or revenue significance to justify litigation.
The 2024 CBIC circular specifically notes the objective of reducing unnecessary litigation while providing greater certainty to taxpayers.
Practical Example – Tax Demand With Interest and Penalty
Suppose a tax order contains:
- disputed tax: ₹15 lakh;
- interest: ₹3 lakh; and
- penalty: ₹15 lakh.
Where the dispute concerns the tax demand together with interest and penalty, the 2024 CBIC framework states that the disputed tax amount is considered for applying the monetary limit.
Therefore, the relevant amount for the departmental monetary threshold is ₹15 lakh, not ₹33 lakh.
Practical Example – Penalty-Only Dispute
Suppose there is no disputed tax, but the department has imposed a penalty of ₹18 lakh.
Where the dispute concerns penalty only, the disputed penalty amount is considered for applying the monetary limit.
Therefore, the ₹18 lakh amount is the relevant amount for the threshold calculation.
Practical Example – Interest-Only Dispute
Suppose the only issue under dispute is interest of ₹15 lakh.
The disputed interest amount is considered for determining whether the departmental monetary threshold is crossed.
Practical Example – Erroneous Refund
Suppose an erroneous refund of ₹18 lakh is disputed.
The amount of refund in dispute is considered for applying the monetary limit.
The circular treats the disputed refund amount as the relevant amount for this purpose.
Practical Example – Classification Dispute
Suppose a case concerns the classification of a product.
Even if the disputed amount is below the normal monetary threshold, classification is specifically identified in the CBIC circular among matters for which the department’s decision to file an appeal is to be taken on merits irrespective of the monetary limit.
This is because classification issues can have recurring implications beyond the individual disputed amount.
Practical Example – Place of Supply
Place-of-supply disputes are also specifically included among the categories identified by CBIC as exclusions from the monetary-limit restriction.
Therefore, a place-of-supply issue may be considered for departmental appeal on merits even where the normal monetary threshold is not met.
Practical Example – Constitutional Validity
Suppose a court holds that a provision of the CGST Act is unconstitutional.
Such a case falls within the exclusions specified in the CBIC circular.
The department’s decision regarding further appeal is therefore made on merits rather than being automatically controlled by the monetary threshold.
Section 120 and “Same or Similar Issues”
The phrase “same or similar issues or questions of law” in Section 120(2) is important.
The department’s decision not to appeal in one case does not permanently settle every other case involving the same legal issue.
The department can evaluate another case independently, including cases where:
- the amount is higher;
- the issue has broader implications;
- a different factual situation exists; or
- the matter falls within an exclusion.
Does Section 120 Prevent the Department From Appealing a Small-Value Case?
As a general departmental policy under the current CBIC circular, appeals below the prescribed monetary limits are not to be filed, subject to the exclusions.
However, the statutory wording of Section 120 gives the Board power to issue the relevant orders, instructions or directions, and the applicable departmental circular must be considered when determining the current position.
Is Section 120 a Waiver of Tax?
No.
Section 120 does not:
- waive a tax demand;
- cancel a penalty;
- reduce interest;
- determine whether tax is legally payable;
- decide the merits of a dispute; or
- convert an incorrect order into a correct one.
It is a provision concerning the filing of departmental appeals or applications.
Does Non-Filing Mean the Department Accepts the Order?
No.
Section 120(3) specifically prevents a party from contending that the Central Tax officer has acquiesced in the decision merely because an appeal or application was not filed pursuant to the monetary-limit directions.
CBIC’s 2024 circular reinforces this position and states that non-filing solely because of the monetary limit should not be treated as acceptance of the disputed issue.
Section 120 – Important Compliance and Litigation Points
Businesses dealing with GST litigation should keep the following points in mind:
- Determine whether the appeal is being filed by the taxpayer or by the department.
- Do not confuse departmental monetary limits with taxpayer appeal rights.
- Check the applicable forum.
- Identify the disputed amount correctly.
- Consider whether the matter involves tax, interest, penalty, late fee or erroneous refund.
- Check whether the case falls within one of the specified exclusions.
- Do not assume that non-filing by the department means acceptance of the legal issue.
- Check whether the department’s earlier non-filing was solely because of a monetary threshold.
- For recurring or interpretative issues, examine the applicable litigation instructions carefully.
Section 120 – Difference From Section 121
Section 120 deals with departmental monetary limits for filing appeals or applications.
Section 121, which follows Section 120, deals with non-appealable decisions and orders.
These provisions are therefore different.
Section 120
An appeal may legally be available, but the department may be instructed not to pursue it because of the prescribed monetary limit, subject to exclusions.
Section 121
Certain specified decisions and orders are expressly made non-appealable.
Therefore:
Section 120 = limits departmental litigation
Section 121 = identifies certain decisions/orders against which appeal does not lie
Section 120 – Key Takeaways
The main points of Section 120 can be summarised as follows:
- Section 120 deals with appeals not being filed in certain cases by Central Tax officers.
- The Board can fix monetary limits for departmental appeals and applications.
- Such limits are issued on the recommendations of the GST Council.
- Section 120 applies to litigation under the appellate and revision framework of Chapter XVIII.
- The provision primarily regulates departmental litigation rather than taxpayer appeals.
- Non-filing in one case because of a monetary limit does not prevent filing in another case involving the same or similar issue.
- Non-filing does not automatically mean that the department accepted the disputed legal position.
- The Appellate Tribunal or court must have regard to the circumstances behind departmental non-filing.
- CBIC Circular No. 207/1/2024-GST fixed ₹20 lakh for GSTAT, ₹1 crore for High Court and ₹2 crore for Supreme Court departmental litigation, subject to exclusions.
- For tax disputes, the disputed tax amount is generally considered for applying the threshold.
- Interest-only, penalty-only and late-fee-only disputes are treated according to their respective disputed amounts.
- Erroneous refund disputes are considered based on the refund amount in dispute.
- Composite orders are considered on the total amount involved as specified in the CBIC circular.
- Certain constitutional, ultra vires, recurring and interpretative matters are excluded from the normal monetary restriction.
- Classification, valuation, refunds and place-of-supply matters are among the specified categories.
- Adverse judicial comments and certain other matters may also fall within the exclusions.
- A case exceeding the monetary limit is not automatically required to be appealed; the merits must still be considered.
- Section 120 does not waive tax or decide the merits of a GST dispute.
- Taxpayers should not confuse departmental monetary limits with their own statutory appeal rights.
👉 Read More → Section 120 – Appeal not to be filed in certain cases
Conclusion
Section 120 of the CGST Act provides the statutory framework for regulating departmental appeals and applications through monetary limits. It authorises the Board, on the recommendations of the GST Council, to issue orders, instructions or directions fixing monetary thresholds for Central Tax officers.
The current CBIC framework under Circular No. 207/1/2024-GST specifies monetary limits of ₹20 lakh for GSTAT, ₹1 crore for High Court and ₹2 crore for the Supreme Court, subject to the exclusions and conditions contained in the circular.
Section 120 is not simply about the amount involved. It also protects the department from the argument that failure to appeal in one case amounts to acceptance of the legal issue. Under Section 120(2) and (3), non-filing because of the monetary threshold does not prevent an appeal in another similar case and does not by itself amount to acquiescence.
The monetary limits also do not apply mechanically to every case. CBIC has identified several exclusions, including matters concerning constitutional validity, ultra vires rules or notifications, recurring interpretative issues, valuation, classification, refunds, place of supply and certain other matters.
For taxpayers, the most important point is that Section 120 regulates departmental litigation and does not itself remove the taxpayer’s statutory right to appeal. A taxpayer should therefore examine the applicable appeal provision, limitation period, pre-deposit requirements and forum separately.
Section 120 should be read together with Sections 107 to 119 and Section 121, which collectively establish the framework governing appeals, revision, the Appellate Tribunal, High Court and Supreme Court, as well as restrictions and consequences relating to departmental litigation.
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