The idea of creating the

Authority of Advance Ruling

in 1999 was to give specific rul-
ings to individual assessees
who are entitled to Rulings
when they start manufacture
or import etc.
But a vagueness has been
created by an interpretation
given by the Board to the
Section 23D sub section (2)(b).
This sub section says that the
Authority will not give a Ruling
where the question raised is
the same as in a matter alr-
eady decided by the Appellate
Tribunal or any Court.
There are similar sections
for Customs and Service Tax.
The Board has given a clarifi-
cation vide instruction F.No.2-
75/83/2012-Cx.8A dated 29th
November, 2013, which has
diluted the issue about giving a
specific ruling for a particular
assessee.
This instruction says that
the issue or the question of law
which stands already decided
by the Appellate Tribunal or
any court in the case of any
party will fall outside the
purview of the Authority for
Advance Rulings.
However, care should be
taken by the Authority to satis-
fy that the issue has actually
been so decided, squarely cov-
ers the issue raised by the
applicant. This clarification has
been issued because there has
been a doubt about the inter-
pretation of Section 23D(2)(b).
The doubt is whether the deci-
sion given by the Tribunal or
Court is in relation to him or in
relation to any other person.
The previous sub section (a)
mentions in the
applicants case. In
the sub section (b) it
is not written in the
applicants case.
But the meaning
would be complete if
only sub section (b)
also relates to the
applicants case. If it is not,
that is to say, if it relates to any-
body elses case, then it will
mean that it will be an open
issue. There are many judge-
ments in relation to the same
issue, both in Tribunal as well
as in the courts and sometimes
in the Supreme Court.
For example, regarding the
leviability of service tax on
clubs, there are several court
judgments that Service Tax is
not leviable on clubs based on
the principle of mutuality.
If a club (as a joint venture
with foreign collaboration)
approaches the Authority for
Advance Rulings for
a ruling in its case,
and if the Authority
does not give a rul-
ing on the ground
that the issue has
been decided by the
courts in some other
cases, then the club
is in the same problem of
uncertainty because the
Department will routinely dis-
allow any claim for non-pay-
ment of duty.
This is what is happening
also in the case welding elec-
trodes where there are hundred
judgements that input credit is
available, but the Department
is denying it routinely in each
case. It is difficult to und-
erstand why the CBEC has nev-
er been able to find sufficient
time to issue a tariff ruling in
regard to welding electrodes.
The Department is under
pressure to fulfil the revenue
target. In this context, one has
to take into account the fact
that the Department files liti-
gation in the most frivolous
manner and nearly 90 per cent
of the cases are lost by the
Department in appeal, Trib-
unal and in court stages.
The conclusion is that in
view of the reality that an indi-
vidual assessee does not get
justice (or gets a delayed and
litigated justice) from the
Department unless he has a
specific Ruling in his favour,
and also in view of the fact that
the Authority for Advance
Rulings was created only to
give him a specific ruling, the
present interpretation given by
the CBEC in the above instruc-
tion is quite contrary to the
interests of the general tax pay-
ers. They need a specific ruling
even if there is a general issue
decided by the Tribunal or
the court.
So Section 23D(2)(b) should
be amended to incorporate the
expression in the applicants
case as in the Section 23-
D(2)(a). I also suggest that even
Section 23D(2)(a) should be
amended to delete before any
Central Excise Officer bec-
ause once it goes to a Central
Excise Officer, it takes years to
come out of it and go to the
Tribunal. So the amended
Section 23D(2)(a) should read
already pending in the appli-
cants case before the Tribunal
or any court.
smukher2000@yahoo.com
Advance ruling powers diluted by clarification
The
interpretation
by the CBEC is
contrary to the
interests of the
general
taxpayers
EXPERT EYE
SUKUMAR MUKHOPADHYAY
CBEC instruction says any issue decided by the Appelate Tribunal or courts will be outside the purview of AAR