Gauhati High Court Holds Service Tax Appeals Must Meet Monetary Limit Per Assessment Year; Consolidated Demands Not Permissible Absent Fraud

The Gauhati High Court, in its decision dated 22 April 2026, addressed the maintainability of a Service Tax appeal filed by the Commissioner of CGST and Excise against an assessee, focusing on whether consolidated tax demands across multiple assessment years could be clubbed to meet the monetary threshold for appeals under the Finance Ministry’s Notification dated 06.08.2024.

The appeal challenged a CESTAT Kolkata order that had set aside a Service Tax demand, which was based solely on entries in Form 26AS and included an extended limitation period. The appellant contended that the assessee failed to provide necessary documents or rebut the demand, and that the CESTAT erred in holding such a demand unsustainable. The respondent argued that the demand was made for exempted services and that, per the 2024 notification, the monetary limit for appeals must be satisfied for each assessment year individually, not by aggregating demands across years.

The Court examined the relevant notification, which aims to reduce government litigation by raising the monetary limits for departmental appeals. It noted that the Service Tax demand in question spanned four assessment years (2014-15 to 2017-18), with each year’s demand falling below the Rs. 2 crore threshold, but the total exceeding it only when aggregated. The respondent relied on precedents from the Bombay and Allahabad High Courts, which held that each assessment year is a separate unit for tax assessment and appeals, and that consolidated notices are generally impermissible unless fraud is alleged across multiple years.

The Court analyzed the statutory scheme and judicial precedents, including the Bombay High Court’s decision in Polycott Corporation and Aasawa Brothers Corporate Avenue, and the Delhi High Court’s ruling in Ambika Traders. It observed that, except in cases involving fraud or complex transactions spanning several years, consolidated show cause notices and appeals aggregating demands across years are not sustainable. The Court further clarified that time-barred claims cannot be included in consolidated demands to meet the monetary threshold for appeals.

Applying these principles, the Court found that the demand for the assessment year 2014-15 was time-barred, and the remaining valid demand for 2015-16 to 2017-18 totaled less than Rs. 2 crores. As such, the appeal did not meet the monetary limit prescribed by the 2024 notification and was therefore not maintainable. The Court dismissed the appeal on this ground, expressly leaving open the broader question of whether consolidated demands can be clubbed to overcome the monetary limit for appeals in other circumstances.

This decision reinforces the principle that, in the absence of fraud, Service Tax appeals must satisfy the monetary threshold for each assessment year individually, and authorities cannot aggregate demands across years to circumvent statutory limits on appeals.