Bombay High Court: A Division Bench of M.S. Sanklecha and M.S. Sonak, JJ. while allowing the petition filed against the order of the Maharashtra Appellate Authority for Advance Ruling for Goods and Service Tax (“Appellate Authority”) constituted under the Maharashtra Goods and Services Tax Act, 2017, observed that the Appellate Authority is well within its jurisdiction to advert to ‘new grounds’ in support of its decision.
The petitioner JSW Energy Ltd. proposed to enter into an arrangement with JSW Steel Ltd. involving inter alia conversion of coal and other inputs into electricity and conversion of electricity into Steel on a job work basis. In order to ascertain whether the proposed arrangement, indeed qualifies as “job work” as defined under Section 2(68) of the CGST Act, 2017 and consequently whether the petitioner is entitled to benefits under the CGST and MGST, the petitioner, applied to the Advance Ruling Authority seeking advance ruling on the applicability of GST to the proposed arrangement.
The Advanced ruling Authority held that the proposed work amounted to “manufacture” and not “Job work”, and as such, GST was leviable. Aggrieved, the petitioner applied to the Appellate Authority which disagreed with the reasoning given by Advanced Ruling Authority. It was of the opinion that the expressions “job work” and “manufacture” are not mutually exclusive. However, it upheld the operative part of the order of the Advanced Ruling Authority on two different grounds (“new grounds”).
Senior Advocate Rafique Dada, representing the petitioner, argued that the Appellate Authority exceeded its jurisdiction in introducing or relying upon new grounds which were never raised before the Advance Ruling Authority by the Revenue. Counsel Pradeep S. Jetly appearing with J.B. Mishra for Union of India, submitted that there was no scope for challenging the impugned order. H.B. Takke, AGP supported the submissions made by Pradeep S. Jetly.
The High court held that scope of proceedings where an assessee or a potential assessee seeks advance ruling is different from the scope of proceedings before other Appellate Tribunals. It was held: “The Appellate Authority, in a given case, may be entitled to uphold the conclusion of Advance Ruling Authority, albeit, for reasons other than reasons which prompted the Advance Ruling Authority to base its decision. Ultimately, the Appellate Authority is required to give its ruling on the question posed by taking into account the relevant circumstances and eschewing irrelevant ones. Therefore, is the Advance Ruling AUthority may have missed a particular point, it is not as if the Appellate Authority is precluded from adverting to such point and basing its ruling on the same.”
However, finding on facts of the case, that the Appellate Authority did not provide an opportunity to the petitioner to meet the new grounds, the High Court held that it violated the principles of natural justice. This vitiated the order passed by the Appellate Authority. Resultantly, the Court quashed the impugned order and remanded the matter back to the Appellate Authority for disposing of the petitioners’ appeal in accordance with the law. [JSW Energy Ltd. v. Union of India, 2019 SCC OnLine Bom 988, decided on 07-06-2019]
