By Nagesh Jadhav
The provisions of GST law allow a person to apply for advance ruling to get specific points clarified from the Authority for Advance Ruling (“AAR”). The AAR is required to issue ruling stating the position of law on the question raised in the application. However, if the applicant is not satisfied with the ruling pronounced by the AAR, the GST law enables him to file an appeal before the Appellate Authority for Advance Ruling ("AAAR").The AAAR may, after giving the parties to the appeal or reference an opportunity of being heard, pass such order as it thinks fit, confirming or modifying the ruling appealed against.
The CGST Act provides that unless the law, facts or circumstances supporting the original advance ruling have changed, the advance ruling pronounced by the AAR or the AAAR shall be binding only on:
- The applicant who had sought it in respect of any matter referred for advance ruling;
- The concerned officer or the jurisdictional officer in respect of the applicant.
The Bombay High Court refused to interfere with the AAAR’s order and specifically noted that merely because the statute has not provided any further remedy of appeal, it does not become a fit case for further appeal before the High Court and any such attempt, would amount to converting the proceedings under Article 226/227 of the Constitution of India, which are essentially proceedings seeking judicial review, into appellate proceedings. The High Court further noted that even though they will not look into the merits/de-merits of the impugned order, they are empowered to judicially review the order on the basis of the principles of natural justice to check whether the order has been passed in conformity with the same Therefore, the validity or otherwise of the impugned orders will have to be examined by applying the principles of judicial review and not the principles which apply in case of an appeal.
In delivering this judgement, the Bombay High Court relied on the judgement of the Supreme Court in the case of Appropriate Authority and Another v. Smt. Sudha Patil and Anr. [(1999) 235 ITR 118 (SC)]. In the said case, the Supreme Court had held that merely because no appeal mechanism was provided for against the order of an appropriate authority directing compulsory acquisition by the government, the supervisory power of the High Court would not get enlarged nor can the High Court exercise an appellate power.
The Bombay High Court further held that the principles of judicial review, normally do not concern themselves with the decision itself, but are mostly confined to the decision-making process and such proceedings are not an appeal against the decision in question, but a review of the manner in which such decision may have been made. In judicial review, the court determines the correctness of the decision-making process and not the correctness of the decision itself. In exercise of powers of judicial review, the court is mainly concerned with issues like whether the decision-making authority exceeded its jurisdictional limits, committed errors of law, acted in breach of principles of natural justice or arrived at a decision which is ex-facie unreasonable or perverse.
Although this judgement would be binding on the assessees located in the State of Maharashtra, there is high possibility of other High Courts following this judgement.From this judgment, it can be concluded that the order passed by the AAAR, cannot be challenged in the High Court through writ petition. It can only be challenged in the High Court in the following scenarios:
- AAAR exceeding its jurisdictional limits;
- Committing errors of law;
- Acted in breach of principles of natural justice; or
- Arrived at a decision which is ex-facie unreasonable or vitiated by perversity
[The author is a Senior Associate, GST Practice, Lakshmikumaran and Sridharan, Pune]