Three important outcome of JSW Energy Limited GST case

Introduction:

Case: JSW Energy Limited Vs. Union of India and ors.

THE HIGH COURT OF JUDICATURE AT BOMBAY

DATE : 07 JUNE2019

This is one of the important cases for many reasons. While discussing it following issues get resolved.

• Whether a job work activity can be the manufacturer?
• A high court can review the decisions of an advance ruling authority?
• A high court can review the procedure followed in an advance ruling proceeding?

Although this particular order is about the last two. But discussion can cover the first one also. In AR the process was quoted a not a job work because there is a manufacturer. The AAAR held that it can be a job work even is there is manufacture. But held the conclusion by inserting two new grounds. Some beautiful lines are used by AAAR quoted by honourable high court.

A high court can review the decisions of an advance ruling authority?

The honourable high court observed that just because there is no appeal is provided against an order, the scope of High court cant gets enlarged to review the order. Although it can review the proceedings for the order to see the principle of natural justice. Here the case of Appropriate Authority and another vs. Smt. Sudha Patil and anr. – (1999) 235 ITR 118 (SC) was quoted. The court observed that:

An AAAR can insert ” new grounds” which were not considered by AAR :JSW Energy Limited

The honorable court in case of JSW Energy Limited it was also observed that an AAAR has the right to insert the new grounds for its observation.In Reckitt & Colman of India Ltd (supra), the Supreme Court was concerned with adjudicatory proceedings, which, to a great extent, are adversarial in nature. It is in that context that the Supreme Court observed that an Appellate Tribunal is not competent to make out in favour of the Revenue, a case which the Revenue never canvassed or which the assessee was never required to meet. Such observations therefore, will have to be read in the context of adjudicatory proceedings, the scope of which is not quite the same as the scope of proceedings where an assessee or a potential assessee seeks advance ruling.

A high court can review the procedure followed in an advance ruling proceeding?

19] In M/s. R.B. Shreeram Durga Prasad and Fatehchand Nursing Das vs. Settlement Commission (IT & WT) and anr. – (1989) 1 SCC 628, the Supreme Court was concerned with judicial review of the orders of Settlement Commission, which were alleged to have been made in breach of the principles of natural justice. The Supreme Court emphasized that principles of natural justice would certainly apply in such matters.

It was held that court cant reviews the decision itself but the review the procedure followed. In this case, new grounds were added without giving any information to the applicant. He was not given any opportunity of being heard. Thus the procedure followed in the decision was flawed.

Whether a job work activity can be a manufacture 

Although advance ruling authority in case of JSW energy limited denied the process to be a job work. Their plea was that it is a manufacturer. But AAAR held that there can be job work even if there is a manufacturer.