HC restricts scope of writ jurisdiction against order passed by AAAR

This Tax Alert summarizes a recent ruling of the Bombay High Court (HC) on the admissibility of writ petition against the order of the Appellate Authority for Advance Ruling (AAAR).

The key observations of the HC are:

• The legislative scheme indicates that the provisions relating to advance ruling are distinct from the appeal and revision. The order of the AAAR is binding on the applicant and the concerned jurisdictional officer. No further appeal is provided. This legislative scheme has to be kept in mind when the applicant challenges the order passed by the AAAR invoking writ jurisdiction.
  
• In the present case, the AAAR followed the entire procedure, and full opportunity was given to the assessee. There is no ground raised of breach of principles of natural justice on account of not giving an opportunity of being heard.
  
• The view taken by AAAR is based on the material placed before it. The assessee’s intention to convert this limited enquiry into an appellate enquiry is not permissible to be undertaken in the writ jurisdiction.
  
• The Authorities have dealt with the issue in extenso, having considered the submissions and the law cited. The view taken in the matter cannot be considered as suffering from fundamental error or absurd or perverse.
  

Accordingly, HC dismissed the writ petition filed by the assessee, challenging the order passed by the AAAR.

Comments

• In the past, HCs have entertained writ petitions against the orders passed by AAARs in cases where principles of natural justice were violated, proper procedures were not followed, or such orders exceeded the jurisdiction. In such cases, the Courts have remanded the matter back to AAAR for fresh consideration with specific directions.
  
• Since the advance rulings cannot be appealed before the courts on merits, taxpayers may consider adopting different route while taking a position on issues requiring interpretation of law.