TaxTMI 
TaxTMI 
2013 (6) TMI 74
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....ations of the second respondent under section 245R(2) of the Act and subsequent proceedings dated August 3, 2010, refusing to revoke the order of admission. Background (i) The transaction Shanta Biotechnics Ltd. (hereafter, "Shantha") is an Indian company with registered office at Hyderabad. Till November, 2006, 50 per cent. of its shares were held by residents, non-residents and overseas corporate bodies (OCBs). The remaining capital was held by a Mauritius Co., namely, United Overseas Investment Ltd. (UOIL). ShanH is a company incorporated in Lyon, France. It is wholly owned subsidiary of Merieux Alliance (MA) having its registered office at Lyon, France. On November 6, 2006, MA through its subsidiary entered into share purchase agreement on November 6, 2006 (first SPA, for brevity). Shantha, MA, UOIL and two directors were signatories to the first share purchase agreement. Resultantly, ShanH became majority stakeholder. In March, 2009, Groupe Industrial Marcel Dassault (GIMD), another French company acquired 20 per cent. stake of ShanH. As on March 31, 2009, MA and GIMD held 80 per cent. shares in Shantha. Thus, it came under the direct control and management of the MA gro....
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....ncrease. The applicant, GIMD and ShanH are all French incorporated companies of France. They have been paying their taxes in France. ShanH was formed as an entity to pursue the activities in developing countries in the field of immunotherapy and as a part of the larger vision they acquired the shares of an Indian company called Shantha Biotechnics Ltd. through its representatives by the share purchase agreement. The applicant and GIMD sold their equity in ShanH to Sanofi Pasteur Holding as per the transaction that concluded in August, 2009. In view of this transaction, the applicant seeks the ruling of this Authority on the following question : 'In terms of the provisions of the Double Taxation Avoidance Treaty dated 6th September, 1994, as amended from time to time, entered into between the Republic of India with the Government of French Republic ("Indo French Tax Treaty") read with section 90 of the Income-tax Act, 1961, whether the capital gains arising from the sale of shares of ShanH (French incorporated entity) by the applicant (French incorporated entity) to Sanofi (French incorporated entity) is liable to tax in France or in India ?' On examination of the applicati....
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....ection (2) of section 245R of the Act. A week thereafter on December 29, 2009, the petitioners allegedly received the proceedings/order dated December 17, 2009. After receiving it, the first petitioner sent communications dated January 7, 2010, and January 27, 2010, reiterating their request to consider the preliminary issue of admissibility under section 245R(2) of the Act. The matter was then adjourned from time to time as the income-tax authority took time for want of clearance of the Central Board of Direct Taxes for engaging a special counsel. On July 8, 2010, and July 16, 2010, the second petitioner allegedly requested for a specific finding on the issue relating to admissibility. On July 26, 2010, the present writ petitions are filed assailing the order dated December 17, 2009. On July 26, 2010, the petitioners requested the Authority for Advance Rulings for postponement of the case to any other date on the ground that the special counsel was suffering from ill-health. The Authority for Advance Rulings then called upon the income-tax authority to file written submissions on all aspects which was duly complied with. On August 3, 2010, the Authority for Advance Rulings pass....
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.... may, taking note of the representation of the Commissioner at the time of first hearing on July 8, 2010, this Authority heard the objections of the Department on the issue of admissibility in order to satisfy ourselves whether there was any valid ground to revoke the order of admission passed earlier, leaving aside the question whether it is legally permissible to set aside the order once passed under section 245R(2). Having been prima facie satisfied that there was no compelling reason to revoke the earlier order of admission and to refuse hearing on the merits and that a comprehensive final order could be passed as regards the grounds made out for revoking the admission as well as on the merits, the case was posted for hearing on the merits under section 245R(2) on the specified date. Thereafter, a series of requests for adjournment have come from the Department's side. We are anguished to note that there is an apparent attempt on the part of the Commissioner to defeat or delay the remedy invoked by the applicant under Chapter XIX-B of the Income-tax Act on tenuous pleas, unmindful of the principle that strictly speaking this is not an adversarial proceeding and, secondly, th....
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....tioners had an opportunity to appear before the Authority for Advance Rulings at the pre-admission stage before the impugned order was passed. The writ petition is filed eight months thereafter, and, therefore, it is barred by delay. Thirdly, even after admission of the matter, on the request made by the petitioners, the Authority for Advance Rulings gave an opportunity to address on the preliminary issue. The Authority for Advance Rulings has considered the petitioners' objections and recorded proceedings on August 3, 2010, duly informing the parties that hearing would continue on the merits and that an order would be passed encompassing the preliminary issue as well as the merits. Fourthly, the Authority for Advance Rulings is a statutory creation required to subserve the specific purpose of ensuring qualitative and time bound disposal of important tax issues faced by resident/non-resident applicants ; that the advance ruling is required to be pronounced within six months and that in the scheme of things, there is no statutory compulsion warranting adjudication of preliminary issues and the main issues separately. The writ petitions are premature. These writ petitions are file....
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....ity for Advance Rulings shall be judicial proceedings and it shall have all the powers of civil court in respect of discovery and inspection, enforcing attendance of any person including any officer of the banking company and examining them on oath, issuing commission and compelling production of books of account. It shall have power to regulate its own procedure while exercising their powers under the Act. In 1998 and 2000, there were amendments to sections 245N and 245R of the Act. In 2003 also, there were amendments of some significance. For ready reference, we may quote the provisions, as introduced by 1993, 1998, 2000 and 2003 Finance Acts. Finance Act, 1993 After the enactment of the Finance Act, 1993, with effect from June 1, 1993, sections 245N and 245R read as under: "245N. Definitions.-In this Chapter, unless the context otherwise requires,- (a) 'advance ruling' means the determination, by the Authority, of a question of law or fact specified in the application in relation to a transaction which has been undertaken, or is proposed to be undertaken, by the applicant ; (b) 'applicant' means a non-resident making an application ;(other portion is omitted as....
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....ere the question raised in the application,- (a) is already pending in the applicant's case before any income-tax authority, the Appellate Tribunal or any court ; (b) involves determination of fair market value of any property ; (c) relates to a transaction which is designed prima facie for the avoidance of income-tax : Provided further that no application shall be rejected under this sub-section unless an opportunity has been given to the applicant of being heard : Provided also that where the application is rejected, reasons for such rejection shall be given in the order." "245RR. Appellate authority not to proceed in certain cases.-No income-tax authority or the Appellate Tribunal shall proceed to decide any issue in respect to which an application has been made by an applicant, being a resident, under sub-section (1) of section 245R." Finance Act, 2000 After amendment by the Finance Act, 2000, with effect from June 1, 2000, sections 245N and 245R read as under : "245N. Definitions.-In this Chapter, unless the context otherwise requires,- (a) 'advance ruling' means- (i) a determination by the Authority in relation to a transaction which has been ....
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....context otherwise requires,- (a) 'advance ruling' means- (i) a determination by the Authority in relation to a transaction which has been undertaken or is proposed to be undertaken by a non-resident applicant ; or (ii) a determination by the Authority in relation to the tax liability of a non-resident arising out of a transaction which has been undertaken or is proposed to be undertaken by a resident applicant with such non-resident, and such determination shall include the determination of any question of law or of fact specified in the application ; (iii) a determination or decision by the Authority in respect of an issue relating to computation of total income which is pending before any income-tax authority or the Appellate Tribunal and such determination or decision shall include the determination or decision of any question of law or of fact relating to such computation of total income specified in the application : Provided that where an advance ruling has been pronounced, before the date on which the Finance Bill, 2003, receives the assent of the President, by the Authority in respect of an application by a resident applicant referred to in sub-clause (ii) of....
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....ng its advance ruling, provide an opportunity to the applicant of being heard, either in person or through a duly authorised representative. Explanation.-For the purposes of this sub-section, 'authorised representative' shall have the meaning assigned to it in sub-section (2) of section 288, as if the applicant were an assessee. (6) The Authority shall pronounce its advance ruling in writing within six months of the receipt of application. (7) A copy of the advance ruling pronounced by the Authority, duly signed by the Members and certified in the prescribed manner shall be sent to the applicant and to the Commissioner, as soon as may be, after such pronouncement." (ii) Analysis of Chapter XIX-B The history of legislation in relation to the "advance ruling" would show that initially the jurisdiction of the Authority for Advance Rulings was limited to determination of the tax liability of a non-resident applicant in relation to a transaction which has been undertaken. By subsequent amendments, the scope was enlarged. It may be mentioned that the legislative facilitation of advance ruling system in the field of direct taxes as well as in the field of indirect taxes (se....
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....ows a period of thirty days to the applicant to withdraw the application (section 245Q). The second step is to issue notice to the Central Board of Direct Taxes or the jurisdictional Commissioner, as the case may be, and call for the relevant records if the Authority for Advance Rulings proposes to give an advance ruling (section 245R(1) and rule 13 of the Authority for Advance Rulings (Procedure) Rules, 1996 ("the AAR Rules", for brevity). The third step is the rejection of the application for advance ruling for any reasons mentioned in the first proviso to section 245R(2). These are-(i) when the question raised in the application is already pending before any income-tax authority or the Appellate Tribunal or any court ; (ii) involves determination of fair market value of any property ; or (iii) relates to a transaction or issue which is designed for the avoidance of income-tax. The power to reject an application in limine is subject to two conditions, namely, (i) it cannot be rejected without giving an opportunity to the applicant of being heard ; and (ii) it cannot be rejected without giving reasons for such rejection. The copy of the order of rejection shall be sent to the appl....
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....of the Authority for Advance Rulings to refuse to decide the preliminary objection of threshold bar and proceed to consider the application under section 245R(4) and (6) of the Act. The transaction between the second respondent and Sanofi indisputably involves the interpretation of Indo-French DTAT. To deny consideration ; in such circumstances due to alleged threshold bar, may not be proper and would tantamount to abdication of jurisdiction. The existence of jurisdictional facts is the sine qua non for any tribunal or authority to assume jurisdiction. The applicability of the proviso to section 245R(2) of the Act is a matter for enquiry into the facts as pleaded in the application and records produced by the Commissioner. As noticed supra, Parliament itself made a distinction between resident and non-resident applications while fettering the power of the Authority for Advance Rulings, when a question of inherent lack of jurisdiction is raised. If the enquiry as to existence or non-existence of jurisdictional facts itself involves detailed and in-depth enquiry, the Act a fortiori does not prohibit the Authority for Advance Rulings to decline adjudication of preliminary issue and pr....
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....r adjudication of peripheral issues, avoiding decision on issues more vital to them. Article 226 and article 136 are not meant to be used to break the resistance of workmen in this fashion. Tribunals and courts who are requested to decide preliminary questions must, therefore, ask themselves whether such threshold part adjudication is really necessary and whether it will not lead to other woeful consequences. After all tribunals like Industrial Tribunals are constituted to decide expeditiously special kinds of disputes and their jurisdiction to so decide is not to be stifled by all manner of preliminary objections and journeyings up and down. It is also worthwhile remembering that the nature of the jurisdiction under article 226 is supervisory and not appellate while that under article 136 is primarily supervisory but the court may exercise all necessary appellate powers to do substantial justice. In the exercise of such jurisdiction neither the High Court nor this court is required to be too astute to interfere with the exercise of jurisdiction by Special Tribunals at interlocutory stages and on preliminary issues." (emphasis supplied) The Authority for Advance Rulings is heade....
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....dhikabai, AIR 1986 SC 1272, the difference between the exercise of the original jurisdic- tion under article 226 and the supervisory jurisdiction under article 227 was considered. It was held that the power to issue a writ of certiorari is to be exercised sparingly and only in appropriate cases, where the judicial conscience of the High Court dictates it to act lest a gross failure of justice or grave injustice would occasion. When a certiorari is issued there must exist the conditions that the decision-maker acted without jurisdiction by assuming jurisdiction where there exists none, or in excess of jurisdiction by overstepping or crossing the limits of jurisdiction, or acted in flagrant disregard of the law or the rules of procedure or in violation of the principles of natural justice thereby occasioning failure of justice. Jurisdiction under article 227 is exercised over the subordinate courts and tribunals within the High Court territory when they assume jurisdiction which did not have or fail to exercise jurisdiction which they have or the jurisdiction though available was exercised in a manner not permitted by law. Importantly it was also held that if an error of jurisdict....
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....al jurisdiction and the people have a right, unless expressly or impliedly debarred, to insist for free access to the courts of general jurisdiction of the State. Indeed, the principle is not limited to civil courts alone, but applies to all courts of general jurisdiction including criminal courts . . . Exclusion of jurisdiction of ordinary criminal courts can be brought about by setting up courts of limited jurisdiction in respect of the limited field, only if the vesting and the exercise of that limited jurisdiction is clear and operative and there is an adequate machinery for the exercise of the limited jurisdiction. But the rule against exclusion of jurisdiction of courts like other rules of construction is attracted only where two or more reasonably possible constructions are open on the language of the statute and not where the legislative intent is plain and manifest to oust the jurisdiction." (v) The impugned order of the Authority for Advance Rulings The assumption that the Authority for Advance Rulings did not consider the threshold bar before passing the impugned order, dated December 17, 2009, is not correct. Equally, the plea that there was no notice to the fi....
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....mmediately after receiving the impugned order of admission. The writ petitions have been filed on October 27, 2010, after about seven months. The application raising objection was adjourned at least at the instance of the Department. On July 8, 2010, the arguments were heard on the preliminary objection raised by the Department and the matter was posted for further hearing on the merits on July 16, 2010. Again, the Department sought time on the ground of counsel's ill-health. From July 16, 2010, to August 2, 2010, and even thereafter, the parties before the Authority for Advance Rulings filed written submissions and made oral submissions in relation to the preliminary objection as well as on the merits of the case. Presumably for this reason on August 3, 2010, the Authority for Advance Rulings passed yet another order that there were no compelling reasons to revoke the earlier order of admission. The Authority for Advance Rulings expressed its anguish noting that there is an apparent attempt on the part of the Commissioner to defeat or delay the remedy under Chapter XIX-B of the Act on tenuous pleas, unmindful of the principle that it is not an adversarial proceeding and the pos....
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....accessible ; (viii) the discretion of the crime preventing agencies should not be allowed to pervert the law*. The application of the law needs to be transparent, fair, unbiased and comply with the principles of natural justice. The judicial and non-judicial decision making is subject to the rule of law and, therefore, the proceedings must be fair. In determining (i) the facts, (ii) the applicable principle, and (iii) applying the principle to the determined facts the decision-maker is expected to apply mind. This should manifest in the decision. Professor "De Smith'** points out that the public authority's failure to give reasons is procedurally unfair and indicates that the decision might be irrational. A reviewing court cannot effectively scrutinize if a decision is bereft of reasons. Though there is universal acceptance of these norms, there are variations in regard to the extent, the content, the elaborateness of giving reasons by the public authorities. (ii) Public functions and duty to give reasons The theory of separation of powers postulates trifurcation of public functions: legislative, judicial and administrative. Depending on the nature of functions, the ext....
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....inistrative decision is not put into effect, in many situations, the administrative authorities cannot penalize the beneficiary. However, when once a judicial decision is made, the same is binding and cannot ordinarily be impeached in collateral proceedings. The judicial proceedings are privileged. They are immune from action for defamation. It would be curious to mention that, "courts themselves are not obliged at common law to give reasons for their decisions" (para 7-089 Professor De Smith's Judicial Review, sixth edition,). In Som Datt Datta v. Union of India, AIR 1969 SC 414, a Constitution Bench, while observing that in English law, there is no general rule apart from the statutory requirement that the statutory Tribunal should give reasons, quoted with approval the following rule as stated by Lord Denning in R. v. Northumberland Compensation Appeal Tribunal [1952] 1 All ER 122 (CA) : "if there was a speaking order, a writ of certiorari could be granted to quash the decision of an inferior court or statutory Tribunal on the grounds of error on the face of record.....; that the record must at least contain a document which initiates the proceedings and the adjudication nor ....
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....s of Government activity, in which the depositories of power exercise over class of statutory functions is called "administrative function". The functions discharged by ministers are also executive or administrative. They are neither judicial nor legislative. These administrative functions involve taking policy decisions, conducting inspections and enquiries, issuing licences, ultimate conclusions, findings and the decision based on them, which is binding. In Rai Sahib Ram Jawaya Kapoor v. State of Punjab, AIR 1955 SC 549, the Supreme Court opined that, "ordinarily the executive power connotes the residue of Governmental functions that remain after legislative and judicial functions are taken away.......The executive function comprises both the determination of the policy as well as carrying it into execution. This evidently includes the initiation of legislation, the maintenance of order, the promotion of social and economic welfare, the direction of foreign policy, in fact the carrying on or supervision of the general administration of the State". Every executive action must be supported by reasons although some decisions do not require any reasons. Some times, the policy laid....
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....epresentation does not contain any reasons, the order cannot be held to be bad in law. If such an order is challenged in a court of law it is always open to the competent authority to place the reasons before the court which may have led to the rejection of the representation. It is always open to an administrative authority to produce evidence aliunde before the court to justify its action." (emphasis supplied) Although in a different context, to the same effect are the following observations from the recent judgment of the Supreme Court in Jasbir Singh Chhabra v. State of Punjab [2010] 4 SCC 192, 209: "It must always be remembered that in a democratic polity like ours, the functions of the Government are carried out by different individuals at different levels. The issues and policy matters which are required to be decided by the Government are dealt with by several functionaries some of whom may record notings on the files favouring a particular person or group of persons. Someone may suggest a particular line of action, which may not be conducive to public interest and others may suggest adoption of a different mode in larger public interest. However, the final decision i....
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....to the contrary it is the duty of the authority to act judicially and the decision of the authority is a quasi-judicial act ; and (ii) if a statutory authority has power to do any act which will prejudicially affect the subject, then, although there are not two parties apart from the authority and the contest is between the authority proposing to do the act and the subject opposing it, the final determination of the authority will yet be a quasi-judicial act provided the authority is required by the statute to act judicially. In State of Himachal Pradesh v. Raja Mahendra Pal [1999] 4 SCC 43 ; AIR 1999 SC 1786, the Supreme Court held that, "quasi-judicial acts are such acts which mandate an officer the duty of looking into certain facts not in a way which it specially directs but after a discretion, in its nature judicial. The exercise of power by such tribunal or authority contemplates the adjudication of rival claims of the persons by an act of the mind or judgment upon the proposed course of official action as to an object of the corporate power, for the consequences of which the official will not be liable, although his act was not well-judged. A quasi-judicial-function ha....
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.... of reasons as mandatory (Mahabir Prasad Santosh Kumar, M. L. Capoor and Siemens Engineering). (ii) If the statute does not lay down expressly the requirement of recording reasons, the reasons have to be inferred from the facts and circumstances of the case and on that ground, the order cannot be invalidated (Bhagat Raja, Som Datt and S. N. Mukherjee). (iii) If the order of the quasi-judicial authority is subject to appeal or revision, the necessity for recording reasons is greater because the appellate or revisional authority cannot exercise their powers effectively without knowing the reasons which weighed with the quasi-judicial authority (Madhya Pradesh Industries, Bhagat Raja, Travancore Rayons Ltd. and Mahabir Prasad Santosh Kumar). (iv) Every quasi-judicial order which is subject to judicial review by the High Court ought to be speaking order. Without reasons, the judicial scrutiny would be ineffective and violates rule of law (Bhagat Raja, Travancore Rayons Ltd. and Mahabir Prasad Santosh Kumar). (v) The extent, elaboration, nature of the reasons depend on each case ; but quasi-judicial decision without reasons would negate the rule of law. If the reasons reveal....
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....emented where that would frustrate the statutory purpose." In Som Datt and S. N. Mukherjee-both by Constitution Benches-having regard to sections 162, 164 and 165 of the Army Act, 1950, and rules 61 and 62 of the Army Rules, 1954, held that a statutory Tribunal is not obliged to give reasons if there is express exclusion by the statute itself. In Som Datt, a court of enquiry under Chapter VI of the Army Rules, 1954, was ordered against the appellant followed by a court martial for an offence under section 302 of the Indian Penal Code for the death of Serjeant Bishwanath Singh, who died in an internecine scuffle on the raising day of the unit commanded the delinquent officer. The court martial found guilty of culpable homicide not amounting to murder and of the charge of being a member of unlawful assembly. He was sentenced to cashiering and six years imprisonment. He filed a petition under section 164 of the Army Act. The Chief of Army Staff confirmed the conviction and sentence by the court martial. Som Datt then unsuccessfully filed an appeal under section 165 of the Army Act to the Central Government. Thereafter, he filed a writ petition in the Supreme Court invoking article ....
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....n the present case either by section 164 or by section 165 of the Indian Army Act on the confirming authority or on the Central Government to give reasons for its decision. We have also not been shown any other section of the Army Act or any other statutory rule from which the necessary implication can be drawn that such a duty is cast upon the Central Government or upon the confirming authority. We, therefore, reject the argument of the petitioner that the order of the Chief of the Army Staff, dated May 26, 1967, confirming the finding of the court martial under section 164 of the Army Act or the order of the Central Government dismissing the appeal under section 165 of the Army Act are in any way defective in law. (emphasis supplied) The question whether it was incumbent for the Chief of the Army Staff, while confirming the findings and the sentence of the court martial, and for the Central Government, while rejecting the post-confirmation petition, to record their reasons for the orders passed by them, came to be considered again by another Constitution Bench in S. N. Mukherjee. It was contended therein that Som Datt to the extent it holds that there is no general principle o....
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....dmitting an application for advance ruling ? There cannot be any doubt that the Authority for Advance Rulings exercises quasi-judicial jurisdiction, although in stricto sensu there is no lis for adjudication nor proceedings are adversarial. There is no dispute that the first petitioner delayed the response to the notice issued under section 245R(1), that the Authority for Advance Rulings admitted the application of the second respondent after recording a finding that they are not hit by the proviso to section 245R(2) and that after hearing the petitioners again on August 3, 2002, the Authority for Advance Rulings found no compelling reasons to revoke the earlier order of admission. Therefore, it is not a case where the Authority for Advance Rulings has not considered the objections raised by the petitioners. Even otherwise, as we presently show the plain reading of the provisions would show that the Authority for Advance Rulings is required to give reasons only when an application is rejected. There is no such requirement while admitting an application.In the advance ruling process, the applications under section 243Q of the Act and rule 10 of the Authority for Advance Rulings (Pro....
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....ation. The reasons for this conclusion are as follows. First, a plain reading of section 245R(1) of the Income-tax Act and rule 13(2) of the Authority for Advance Rulings (Procedure) Rules would reveal that the application and enclosures thereto shall be forwarded to the Commissioner notifying the date and place of hearing of the application and if necessary requiring the Commissioner to furnish the relevant records. There is no scope to construe these provisions as enabling the income-tax authority to press for a preliminary ruling on the assumption of the jurisdiction. They may, of course-bring to the notice of the Authority for Advance Rulings about such bar under the first proviso to section 245R(2). Secondly, a perusal of sub-sections (4), (5) and (6) of section 245R and rule 16(1) of the Authority for Advance Rulings (Procedure) Rules makes it clear that even at the stage of final consideration it is not mandatory for the Authority for Advance Rulings to hear the Commissioner. If the Authority for Advance Rulings considers it not necessary, they may do so and pronounce the advance ruling providing an opportunity to the applicant of being heard. Thirdly, as a quasi-judicial au....
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....). But in situations where no prejudice would be caused to third parties, the court may ignore the delay and grant relief (Ramchandra Shankar Deodhar v. State of Maharashtra [1974] 1 SCC 317 ; AIR 1974 SC 259). What is the reasonable period for seeking judicial review ? The aggrieved must approach the court as early as possible after exhausting alternative remedies. The time within which a petition may be moved under article 226 would depend on the facts of each case. There may be situations where even a delay of a day or week would be fatal and the court may feel compelled to deny judicial review for any relief might harm good governance or have the effect of wiping out competing rights. Ordinarily, a period of six months for filing writ petition is considered reasonable (S. S. Rathore v. State of M. P. [1989] 4 SCC 582 ; AIR 1990 SC 10).In a case where the judicial review is sought in relation to the exercise of preliminary jurisdiction like admitting a case for further enquiry, issuing show-cause notice, issuing summons to produce records, issuing summons to appear for recording statement, the prematurity is a ground for exclusion of judicial review. Equally important is when....
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....e hold that section 245R and other provisions of Chapter XIX-B of the Income-tax Act do not require the Authority for Advance Rulings to decide a preliminary issue as to the threshold bar or to record reasons while admitting an application for further examination leading to giving or not giving an advance ruling under section 245R(4) and (6) of the Act. These writ petitions are devoid of any merit, and they are accordingly dismissed without any order as to costs. Ramesh Ranganathan J.-These two writ petitions are filed by the Director of Income-tax (International Taxation), Bangalore, (DIT), and the Additional Director of Income-tax (International Taxation), Hyderabad, (ADIT) to declare the order of the Authority for Advance Rulings (AAR) dated December 17, 2009, admitting the applications filed by the second respondent under section 245Q(1) of the Income-tax Act, 1961 (hereinafter called "the Act"), as illegal, void and inoperative. A further direction is sought to the first respondent to consider the objections of the petitioners, to the admissibility of the applications filed by the second respondent, afresh. The petitioners would submit that a survey, under section 133....
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....s and overseas corporate bodies worth Rs. 16.94 crores during the financial year 2007-08, and Rs. 74.72 crores during the financial year 2008-09 ; ShanH had purchased the shares of "Shantha" from UOIL during the financial years 2006-07, 2007-08 and 2008-09 amounting to Rs. 369 crores, after UOIL had acquired those shares directly from various non-resident Indians ; both ShanH and UOIL were liable to deduct tax under section 195 of the Act on the payments made to the non-resident Indians ; proceedings under section 201(1)/(1A) of the Act, for non-deduction of tax under section 195 of the Act, was completed raising demands in these cases ; the share purchase agreement of 2009 was an arrangement primarily and exclusively carried out for transferring control and management of "Shantha", through ShanH, to the SA group by transfer of 80 per cent. of the equity stake in Shantha ; this transaction was akin to transfer of capital assets located in India by alienation of equity shares of an Indian company "Shantha" through transfer of a French entity ShanH by one controlling entity of France to another ; and these, and other, transactions involved effective transfer of capital assets located....
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....the DIT on December 18, 2009, and December 22, 2009. A report was, in turn, sent by the DIT to the Authority for Advance Rulings on December 23, 2009, contending that the application was hit by the threshold bar contained in clauses (i) and (iii) to the proviso to section 245R(2) of the Act, and the same was liable to be rejected ; in view of the fact that proceedings under section 201 read with section 195 of the Act had been initiated in relation to the current year by issue of notice to Sanofi (i.e., the deductor) as early as on September 17, 2009, and information had been called or from the deductee, i.e., the second respondent by letters dated August 7, 2009, August 31, 2009, October 15, 2009, November 6, 2009, and September 17, 2009, calling upon them to examine their advance tax liability, and to ensure payment of tax, the transaction or issue had already been initiated and must be deemed to be pending before the income-tax authorities within the meaning of clause (i) of the proviso to section 245R(2) of the Act which is as a threshold bar for maintenance of the application before the Authority for Advance Rulings ; and further it involved formulation of own designed plan of....
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....lid ground to revoke the order of admission passed earlier, leaving aside the question whether it was legally permissible to set aside the order once passed under section 245R(2) ; and, having been prima facie satisfied that there was no compelling reason to revoke the earlier order of admission or to refuse a hearing on the merits, and that a comprehensive final order could be passed as regards the grounds made out for revoking the admission as well as on the merits, the case be posted for hearing on the merits under section 245R(4) of the Act. No interim order was initially passed, and we invited counter-affidavits from the second respondent. On completion of pleadings we heard counsel on either side. At the fag end of the oral submissions, we noticed that the order dated August 3, 2010, passed by the Authority for Advance Rulings, subsequent to the filing of the writ petitions, were not subjected to challenge in these writ proceedings. We gave liberty to the petitioners to file applications to amend the prayer in both the writ petitions. Applications were filed seeking amendment of the prayer to include a challenge to the order dated August 3, 2010. The second respondent also....
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....ard ; the said order is in violation of the principles of natural justice ; the order is also a non-speaking order bereft of reasons ; in the absence of a power of review being conferred upon it under the Act, the Authority for Advance Rulings could not review its earlier order dated December 17, 2009 ; the order of the Authority for Advance Rulings dated August 3, 2010, is also bereft of reasons ; and the Authority for Advance Rulings, having heard the petitioner's objections could not have passed the order dated August 3, 2010, postponing passing of a reasoned order till the advance ruling was pronounced. Sri S. Ganesh and Sri S. Ravi, learned senior counsel appearing on behalf of the second respondent in both these writ petitions, would submit that the petitioners were seeking to interfere with the judicial process of the Authority for Advance Rulings, and prevent it from giving its ruling ; the scheme of the Authority for Advance Rulings is to ensure expeditious disposal of cases and, accordingly, the process followed by the Authority for Advance Rulings ought to be respected ; a copy of the application was served on the petitioners, and the comments of the jurisdictional of....
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....re the Authority for Advance Rulings set aside substantially re-inventing its cause of action ; the entire proceedings initiated before this court is premature as the matter was heard by the Authority for Advance Rulings in part ; if every order of admission of the Authority for Advance Rulings is to be vulnerable to a review by the High Court, under the extraordinary jurisdiction conferred under article 226 of the Constitution of India, then the entire functioning of the Authority for Advance Rulings would come to a stand still ; the question of the threshold bar, provided by the first proviso to section 245R(2) of the Act in relation to admitting the application by the Authority for Advance Rulings, would be dealt with by the Authority for Advance Rulings in its final order ; and this court should refrain from ruling on the same. Scheme of advance rulings under Chapter XIX-B of the Act Before examining the rival contentions, it is useful to briefly refer to the scheme of "advance ruling" under Chapter XIX-B of the Act. As is evident, from the title of Chapter XIX-B, the ruling which the Authority for Advance Rulings is required to give should be in "advance". The word "adva....
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....essitates examination is whether forwarding a copy of the application filed by the second respondent, under section 245Q(1) of the Act, to the Central Board of Direct Taxes is sufficient compliance with the requirement of section 245R(1) of the Act. The Additional Commissioner of Income-tax (secretary to the Authority for Advance Rulings), vide letter dated November 24, 2009, informed the Joint Secretary, Central Board of Direct Taxes, that the office of the Authority for Advance Rulings had received an application, under section 245Q(1) of the Act, submitted by the second respondent seeking advance ruling on the stated questions of law/facts ; as per the provisions of section 245R(1) of the Act a copy of the application was to be forwarded to the concerned Commissioner of Income-tax for compliance with the provisions of Chapter XIX-B of the Act ; and, since the applicant was not assessed to tax in India, rule 13(1) of the Rules required a copy of such application to be forwarded to the Central Board of Direct Taxes for designating a Commissioner. The Central Board of Direct Taxes was requested to designate a Commissioner, and to forward a copy of the application to the Commissi....
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....ity for Advance Rulings is required to cause a copy thereof to be forwarded to the Commissioner and, if necessary, to call upon him to produce the relevant records. Under section 2(16) of the Act, the "Commissioner" is defined to mean a person appointed to be a Commissioner of Income-tax under section 117(1) of the Act. Section 117(1) of the Act empowers the Central Government to appoint such persons as it thinks fit to be the income-tax authorities. Under section 116(c), the income-tax authorities include the Director of Income-tax or the Commissioner of Income-tax. Section 2(12) of the Act defines "Board" to mean the Central Board of Direct Taxes constituted under the Central Boards of Revenue Act, 1963 (hereinafter called "the Revenue Act"). The Revenue Act is an Act to provide for the constitution of separate Boards of Revenue for Direct Taxes and for Excise and Customs, and to amend certain enactments for the purpose of conferring powers and imposing duties on the said Boards. Section 2(a) thereof defines "Board" to mean the Central Board of Direct Taxes or the Central Board of Excise and Customs constituted under section 3. Section 3(1) of the Act requires the Central Gove....
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....oner-DIT. Intimation to the Central Board of Direct Taxes, in terms of rule 13(1), is only for the limited purpose of designating the Commissioner, and is no substitute for the mandate of section 245R(1) of an intimation to the Commissioner. Rules made under an Act must be read harmoniously with the provisions of the parent Act Rules made under section 245V of the Act do not, and cannot, run contrary to section 245R(1) of the Act. These rules are subject to the provisions of Chapter XIX-B of the Act including section 245R. The rules so made must be read harmoniously with the provisions of Chapter XIX-B of the Act and not as running contrary thereto. In case of conflict, between the provisions of the Act and the Rules, the former will prevail. The Rules should be interpreted in a manner so as to be in conformity with the provisions of the Act (Ispat Industries Ltd. v. Commissioner of Customs [2006] 12 SCC 583), and not the other way round. A rule has to be read as supplemental to the provisions of the parent Act. It cannot be interpreted in a way as to come into conflict with the parent Act (STO v. H. Farid Ahmed and Sons [1975] 36 STC 767 (SC) ; [1976] 1 SCC 245). A piece of sub....
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....ection 245R(1) of the Act with rule 13 of the Rules would require the secretary of the Authority for Advance Rulings, in cases where the applicant is not assessed under the Act, to request the Central Board of Direct Taxes, in terms of rule 13(1), to designate a Commissioner within two weeks and, after a Commissioner is so designated, to forward a copy of the application filed under section 245Q(1) of the Act to him giving him a reasonable opportunity to furnish the records. As the Authority for Advance Rulings may not be aware whether or not the application filed under section 245Q(1) of the Act is barred, by any one or more of clauses (i) to (iii) of the first proviso to section 245R(2) of the Act, it is for the designated Commissioner, on receipt of intimation under rule 13(2), to submit his objections to the application being allowed, i.e., entertained by the Authority for Advance Rulings. After the Director General of Income tax had designated the DIT as the Commissioner, by his letter dated December 5, 2009, the secretary to the Authority for Advance Rulings, in compliance with the requirements of section 245R(1), ought to have forwarded a copy of the application to the desig....
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....nouncing its advance ruling), where the question raised in the application (i) is already pending before any income-tax authority or Appellate Tribunal except in the case of a resident applicant falling in section 245N(b)(iii) of the Act, or any court ; and (iii) it relates to a transaction or issue which is designed, prima facie, for the avoidance of income-tax except in the case of a resident applicant falling under section 245N(b)(iii) of the Act. If any one of the eventualities specified in the first proviso to section 245R(2) arises, the Authority for Advance Rulings is barred from allowing the application and is bound to reject it. It is true that the third proviso to section 245R(2) requires reasons, for rejection of an application, to be given in the order. This, according to Sri S. Ganesh and Sri S. Ravi, learned senior counsel appearing on behalf of the second respondent in these two writ petitions, would mean that where the Authority for Advance Rulings allows an application, in the sense that it decides to entertain it for the purpose of pronouncing its advance ruling thereupon, no reasons need be assigned as, according to them, the Act has by necessary implication excl....
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....ore the High Court, has the opportunity to demonstrate that the reasons which persuaded the authority to pass an order adverse to his interest were erroneous, irrational or irrelevant ; and (2) the obligation to record reasons and convey the same to the party concerned operates as a deterrent against possible arbitrary action by the quasi-judicial authority. (C. B. Gautam v. Union of India [1993] 199 ITR 530 (SC) ; [1993] 1 SCC 78). Power of judicial review under article 226 of the Constitution of India cannot be barred by plenary legislation Though no limits can be placed upon the discretionary powers of the High Courts, under article 226 of the Constitution, they are exercised along recognised lines and subject to certain self-imposed limitations. The expression "for any other purpose" in article 226 makes the jurisdiction of the High Court's more extensive, but yet its exercise is with certain restraints and within certain parameters (Director of Settlements, A. P. v. M. R. Apparao [2002] 4 SCC 638). Unlike the jurisdiction conferred upon a statutory tribunal, which must be construed in terms of the statute under which it was created, the power of judicial review of the High ....
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.... The function of determining whether the act of a statutory functionary falls within the legislative conferment of power is a matter for the court (Epuru Sudhakar v. Government of A. P. [2006] 8 SCC 161 ; Kehar Singh v. Union of India [1989] 1 SCC 204). If exercise of the power of judicial review under article 226 cannot be barred even by a constitutional provision, as it forms part of the basic structure of the Constitution, it does not stand to reason that the power of judicial review can be barred by legislation-plenary or subordinate. It is only if the order of the Authority for Advance Rulings contains reasons as to why it has chosen to allow the application, i.e., to entertain it for the purpose of pronouncing its advance ruling, would the High Court, while exercising its power of judicial review under article 226 of the Constitution of India, be in a position to decide whether the order necessitates interference or not. The consequences which, an order bereft of reasons, may entail is that the High Court, acting as a court of first instance, could determine whether or not the application, filed under section 245Q(1) of the Act, should be rejected on the touchstone of clau....
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.... therein arise. The Authority for Advance Rulings is a tribunal created under XIX-B of the Act and, being a creature of the Act, has limited jurisdiction and has to function within the four-corners of the statute creating them (O. P. Gupta v. Rattan Singh [1964] 1 SCR 259). It is not open to the Authority for Advance Rulings to travel beyond the provisions of the Act. (D. Ramakrishna Reddy v. Addl. Revenue Divisional Officers [2000] 7 SCC 12). The jurisdiction of the Authority for Advance Rulings is confined to the provisions of the Act under which it has been created. While the Act, in section 245R(2), confers jurisdiction on the Authority for Advance Rulings to decide whether or not to allow an application, i.e., to entertain it for the purpose of pronouncing its advance ruling, the Authority for Advance Rulings cannot conclusively decide its jurisdiction in this regard. Order of the Authority for Advance Rulings to allow an application under section 245R(2): not conclusive The word "jurisdiction" has both a narrow and a wider meaning. In the sense of the former, it means the Authority to embark upon an enquiry; in the sense of the latter it is used in several aspects, one of ....
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....olds that its jurisdiction is not so barred, it cannot enter on the further enquiry which, by section 245R(4) of the Act, it is directed to cause. The Authority for Advance Rulings cannot confer jurisdiction on itself by a wrong decision on this preliminary condition to its jurisdiction. The Authority for Advance Rulings is a tribunal of limited jurisdiction constituted under Chapter XIX-B of the Act. The exercise of jurisdiction by the Authority for Advance Rulings to pronounce its advance ruling under section 245R(4) would depend on its having jurisdiction to allow an application under section 245R(2) of the Act. Once the Authority for Advance Rulings is deprived of its jurisdiction over the subject-matter, in view of the bar under clauses (i) to (iii) of the first proviso to section 245R(2), it can no more proceed with the application which was earlier filed. If it has lost its jurisdiction over the application, in view of the bar under clauses (i) to (iii) of the first proviso to section 245R(2), the Authority for Advance Rulings will have to decline jurisdiction to pronounce an advance ruling on the question stated in the application filed under section 245Q(1) of the Act (See....
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....R. Wade and C. F. Forsyth, page 260). It is always open to the High Court, in an appropriate case, to decide whether or not the Authority for Advance Rulings has jurisdiction to allow the application, i.e., entertain it for the purpose of pronouncing its advance ruling, or whether its jurisdiction to do so is barred consequent upon any of the three eventualities stipulated in clauses (i) to (iii) of the first proviso to section 245R(2) having arisen. It is only if a reasoned order is passed by the Authority for Advance Rulings in this regard would the High Court be in a position to decide whether the Authority for Advance Rulings has acted within or in excess of its jurisdiction, and whether or not it should exercise its discretion to interfere. Learned senior counsel, appearing both on behalf of the petitioners and the second respondent, did not address this court on the question whether the Authority for Advance Rulings had the jurisdiction to pass the order dated December 17, 2009, allowing the application filed by the second respondent under section 245Q(1), or whether the bar under clauses (i) and (iii) of section 245R(2) applied. Learned senior counsel submitted that it wo....
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....ies under the Act include both the assessing authority and the first appellate authority, i.e., the Commissioner of Income-tax (Appeals). Consequently, once an application is filed under section 245Q(1) before the Authority for Advance Rulings, neither can an order of assessment be passed on the same issue nor can appeals pending either before the Commissioner of Income-tax (Appeals) or the Income-tax Appellate Tribunal be decided till the Authority for Advance Rulings pronounces its advance ruling under section 245R(4) of the Act. Accepting the contention of the learned senior counsel, appearing on behalf of the second respondent, that the order of the Authority for Advance Rulings admitting an application is not subject to judicial review by the High Court as, otherwise, it would bring the functioning of the Authority for Advance Rulings to a stand still, would mean that, even if the order is ex facie with-out jurisdiction, the Revenue must await the advance ruling to challenge the validity of the order of the Authority for Advance Rulings admitting the application filed under section 245Q(1) of the Act. Even if the application merited acceptance under section 245R(4), and the qu....
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....missibility of the application and the advance ruling, may well take a few years before it is finally decided by the High Court. In the interregnum, the loss which the Revenue may suffer could well run into several crores. Post-decisional hearing impermissible as the Authority for Advance Rulings has not been conferred the power to review its earlier order A post-decisional hearing, after the application is allowed under section 245R(2), is prohibited by Chapter XIX-B of the Act. The first proviso to section 245R(2) prohibits the Authority for Advance Rulings from allowing an application, (i.e., entertaining an application for pronouncement of its advance ruling), if any one of the three eventualities mentioned in clauses (i) to (iii) thereunder has arisen. It is only in cases where the application, filed under section 245Q(1), is allowed under section 245R(2) does section 245R(4) permit the Authority for Advance Rulings to examine further material and, thereafter, pronounce its advance ruling on the questions stated in the application filed under section 245Q(1) of the Act. A post-decisional hearing would mean that the Authority for Advance Rulings, even after it has allowed....
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....nce Rulings gave the petitioners' an opportunity of hearing on the objections raised by them to the admission of the application, and passed orders thereupon on August 3, 2010. The order dated August 3, 2010, also suffers from the vice of absence of reasons. The Authority for Advance Rulings has not been conferred the power to review its earlier order dated December 17, 2009. Until and unless the order dated December 17, 2009, is set aside, the Authority for Advance Rulings is disabled from either hearing the objections to the admission of the application or pass an order afresh thereupon. We have noted with concern the anguish expressed by the Authority for Advance Rulings in several of its proceedings, including the proceedings dated August 3, 2010. As we have confined our order only to the scheme of advance rulings under Chapter XIX-B of the Act, and on the legal submissions of senior counsel on either side, we refrain from making any observations either on the merits or on the conduct of parties before the hon'ble Authority for Advance Rulings. Examining the application, filed under section 245Q(1) of the Act, on the touchstone of the threshold bar under the first proviso....
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....o and honourable Sri Justice Ramesh Ranganathan and the learned judges of the Division Bench have gone into the matter in great detail and rendered two separate erudite judgments by elaborately recording two conflicting opinions with regard to the question involved. Justice V. V. S. Rao after elaborately noticing the legislation in relation to advance rulings and the amendments carried out to the Finance Act from 1963 to 2003 while holding that section 245R and other provisions of Chapter XIX-B of the Act do not require the Authority for Advance Rulings to decide a preliminary issue as to the threshold bar or to record reasons while admitting an application for further examination leading to giving or not giving an advance ruling under section 245R(4) and (6) of the Act dismissed the writ petitions. But, however, dealing with the same question, Justice Ramesh Ranganathan while holding that "Examining the application, filed under section 245Q(1) of the Act, on the touchstone of the threshold bar under the first proviso to section 245R(2) goes to the very root of the jurisdiction of the Authority for Advance Rulings, as it is only in cases where the threshold bar does not apply can t....
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....n Authority for Advance Rulings Nos. 847 of 2009 and 846 of 2009 admitting the applications filed by the second respondents in both the writ petitions, namely, Marieux Alliance, France, represented by the Economic Laws Practice, #405-406, World Trade Center, Barakhamba Road, New Delhi, and Groupe Industrial Marcel Dassault, represented by the Economic Laws Practice, #405-406, Word Trade Centre, Barakhamba Road, New Delhi, under section 245Q(1) of the Act They sought for a ruling by the Authority for Advance Rulings on the following questions: Question (1) : "Whether, in terms of the provisions of the Double Taxation Avoidance treaty dated September 6, 1994, as amended from time to time, entered between the Republic of India with the Government of French Republic ("Indo-French Tax Treaty") read with section 90 of the Income-tax Act, 1961, whether the capital gains arising to the applicant from the sale of shares of ShanH (french incorporated entity) by the applicant (french incorporated entity) to Sanofi (french incorporated entity) is liable to tax in France or in India?" Question (2) : "Without prejudice to the above, whether controlling interest (assuming while denying t....
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....August 7, 2009, August 31, 2009, October 15, 2009, November 6, 2009, and September 17, 2009, calling upon them to examine their advance tax liability, and to ensure payment of tax, the transaction or issue had already been initiated and must be deemed to be pending before the income-tax authorities within the meaning of clause (i) of the proviso to section 245R(2) of the Act, which is a threshold bar for maintenance of the application before the Authority for Advance Rulings, and further it involved formulation of own designed plan of evasion of income tax in Indian territory, which is also a bar for admission of the application under clause (iii) of the proviso to section 245R(2) of the Act. Before the DIT sending the report, the Authority for Advance Rulings allowed the applications by orders dated December 17, 2009. On receipt of the letter dated December 29, 2009, from the Authority for Advance Rulings informing the petitioners that the order, as to the admission of the application, had already been passed on December 17, 2009, the first petitioner addressed a letter dated January 7, 2010, requesting the Authority for Advance Rulings to reconsider the issue of admissibility ....
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....hat clauses (i) and (iii) of the proviso to section 245R(2) of the Act operates as a threshold bar for maintaining the application under section 245Q(1) of the Act ; that the statutory notices issued to the deductor on the communication issued by the deductee under section 201(1) read with 195 of the Act on August 7, 2009, August 31, 2009, October 15, 2009, November 6, 2009, and the proceedings which are pending before the income-tax authorities within the meaning of clause (i) of the proviso to section 245R(2) of the Act operate as a bar for maintaining the application for advance ruling ; that the first petitioner who is the necessary party to the proceedings under section 245Q(1) was not put on notice by the Authority for Advance Rulings ; that though the Authority for Advance Rulings granted 15 days time for submission of the records, and comments, it should have waited for records and comments from the first petitioner before admitting the application ; that as neither of the petitioners had the knowledge about posting of the case on December 17, 2009, the order of admission passed by the Authority for Advance Rulings is in violation of the principles of natural justice and he....
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....cations. He further contended that when an act has to be done in a particular manner, the same has to be done in the manner prescribed. In support of the above contentions, learned senior counsel relied on the following decisions: (1) M. Pentiah v. Muddala Veeramallappa, AIR 1961 SC 1107 ; (2) Gurdev Kaur v. Kaki [2007] 1 SCC 546 ; and (3) Asst. Commissioner, Commercial Tax Department, Works Contract and Leasing v. Shukla and Brothers [2010] 30 VST 114 (SC) ; [2010] 4 SCC 785.Per contra, Sri Porus Kaka, learned senior counsel representing Sri Sama Sandeep Reddy, learned counsel appearing for the second respondent, contended that whenever an application under section 245Q is received by the Authority for Advance Rulings from an applicant, not hitherto assessed, and there is no Commissioner designated in respect thereof under rule 2(i)(2), a copy of the application and enclosures thereto shall be forwarded to the Board calling upon it to specify or designate within a period of two weeks , the Commissioner for the purposes of the application, failing which the application may be decided without hearing the Commissioner. Under sub-rule (2) of rule 13, the Commissioner is defin....
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....Cas 677 (SC) ; [2009] 2 SCC 547. Sri S. Ravi, learned senior counsel appearing for the respondent while adopting the arguments of Sri Porus Kaka and while referring to rule 8 of the Writ Proceedings Rules, 1977, which provides hearing of the petition before issuance of rule nisi by admitting the writ petition contended that the same analogy will apply for admitting the application by Authority for Advance Rulings and it is not open for the petitioners-Department to contend that they are entitled to hearing before admitting the application. Learned counsel appearing for the parties confined their arguments with regard to the interpretation of section 245R as referred to above. In order to answer the questions set out above, it is necessary to examine the relevant statutory provisions of the Finance Act, 2003, and the Authority for Advance Rulings (Procedure) Rules, 1996. After amendment to the Finance Act, 2003, with effect from June 1, 2003, sections 245N and 245R read as under: "245N. Definitions.-In this Chapter, unless the context otherwise requires,- (a) 'advance ruling' means- (i) a determination by the Authority in relation to a transaction which has been....
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.... clause (b) of section 245N or any court ; (ii) involves determination of fair market value of any property ; (iii) relates to a transaction or issue which is designed prima facie for the avoidance of income-tax except in the case of a resident applicant falling in sub-clause (iii) of clause (b) of section 245N : Provided further that no application shall be rejected under this sub-section unless an opportunity has been given to the applicant of being heard: Provided also that where the application, is rejected, reasons for such rejection shall be given in the order. (3) A copy of every order made under sub-section (2) shall be sent to the applicant and to the Commissioner. (4) Where an application is allowed under sub-section (2), the Authority shall, after examining such further material as may be placed before it by the applicant or obtained by the Authority, pronounce its advance ruling on the question specified in the application. (5) On a request received from the applicant, the Authority shall, before pronouncing its advance ruling, provide an opportunity to the applicant of being heard, either in person or through a duly authorized representative. Ex....
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....ecision. (3) The Authority may, on such conditions as the circumstances of the case may require, adjourn the hearing of the application. 17. Hearing of application ex parte.-Where on the date fixed for hearing or any other day to which the hearing may be adjourned, the applicant or the Commissioner does not appear in person or through an authorized representative when called on for hearing, the Authority may dispose of the application ex parte on the merits: Provided, that where an application has been disposed of as above and the applicant or the Commissioner, as the case may be, applies within 15 days of receipt of the order and satisfies the Authority that there was sufficient cause for his non-appearance when the application was called upon for hearing, the Authority may, after allowing the opposite party a reasonable opportunity of being heard, make an order setting aside the ex parte order and restore the application for fresh hearing." It is well settled that judicial review being a part of the basic structure of the Constitution the power of the High Court under article 226 of the Constitution cannot be circumscribed in any way by any law. Judicial review is ava....
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....gard to procedural requirements while keeping in mind the scheme of the Act and the legislative intent ? Also to ensure that the procedural intricacies do not hamper in achieving the object of the Act, i.e., free market and competition." While answering the above points, the Supreme Court held as under : "Section 26(1), as already noticed, requires the Commission to form an opinion whether or not there exists a prima facie case for issuance of direction to the Director General to conduct an Investigation. This section does not mention about issuance of any notice to any party before or at the time of formation of an opinion by the Commission on the basis of a reference or information received by it. Language of sections 3(4) and 19 and for that matter, any other provision of the Act does not suggest that notice to the informant or any other person is required to be issued at this stage. In contradistinction to this, when the Commission receives the report from the Director General and if it has not already taken a decision to close the case under section 26(2), the Commission is not only expected to forward the copy of the report, issue notice, Invite objections or suggest....
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....dvocate general of the command which is intended as a check on the legality and propriety of the proceedings as well as the findings and sentence of the court martial. Moreover, we find, that section 162 an express provision has been made for recording of reasons based on the merits of the case in relation to the proceedings of the summary court martial in cases where the said proceedings are set aside or the sentence is reduced and no other requirement for recording of reasons is laid down either in the Act or in the Rules in respect of proceedings for confirmation. The only inference that can be drawn from section 162 is that reasons have to be recorded only in cases where the proceedings of a summary court martial are set aside or the sentence is reduced and not when the findings and sentence are confirmed. Section 162 thus negatives a requirement to give reasons on the part of the confirming authority while confirming the findings and sentence of a court martial and it must be held that the confirming authority is not required to record reasons while confirming the findings and sentence of the court martial." (paragraph 46) In Chembra Orchard Produce Ltd. v. Regional Directo....
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....f such application to the Commissioner, if necessary, call upon him to furnish the relevant records, provided that where records have been called for by the Authority in any case, such record shall as soon as possible, be returned to the Commissioner. Sub-section (1) never contemplates filing of objections or response to the application so made. Sub-section (2) authorizes the Authority, after examining the application and the records called for, by order, either allow or reject the application, but a rider is added by way proviso that the Authority shall not allow application where question raised in the application, (i) is already pending before any income-tax authority or Appellate Tribunal except in the case of a resident applicant falling in sub-clause (iii) of clause (b) of section 245N or any court ; (ii) involves determination of fair market value of any property ; and (iii) relates to a transaction or issue which is prima facie designed for the avoidance of income-tax in the case of a resident applicant falling in sub-clause (iii) of clause (b) of section 245N. The second proviso provides that no application shall be rejected unless an opportunity has been given to the appl....
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....fined in rule 2(i)(1) or a Commissioner has been designated by the Board under rule 2(i)(2) or under sub-rule (1) of rule 13, the Authority has to notify the applicant and the Commissioner of the date and place of hearing of the application by forwarding a copy of the same to the Commissioner calling upon him to furnish the relevant records of the case along with his comments, if any, on the contents of the application and nominate his authorised representative if he desires to be heard. Rule 16 of the Rules contemplates hearing of application under three contingencies. (1) It provides (i) hearing of the applicant or its/his authorised representative when the Authority proposed to reject the application ; (ii) when the applicant seeks/has sought an opportunity of being heard, and (iii) hearing of the Commissioner or his authorised representative as well if the Authority considers it necessary before pronouncing its advance ruling. Thus, it is manifestly clear hearing is provided to the Commissioner only before pronouncing the advance ruling but not at the stage of allowing application or rejecting the application. In appropriate cases, the Authority may call upon any perso....