TaxTMI 
TaxTMI 
2026 (7) TMI 981
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....ST Act"), and seeking consequential reliefs. FACTUAL BACKGROUND 3. The brief facts of the case are that the petitioner - Bangalore Metro Rail Corporation Limited (BMRCL), is a joint venture of the Government of India and the Government of Karnataka, constituted for the implementation of the Bangalore Metro Rail Project. The petitioner had initially purchased train sets from a consortium comprising M/s. BEML, Hyundai Rotem, Melco and Mitsubishi Corporation (for short, 'BRMM'). In the course of further expansion, the number of three-car train sets was increased from 50 to 150. In this regard, bids were invited. 3.1 Respondent No.4 - Bharat Earth Movers Limited (for short, 'BEML'), emerged as the successful bidder for the supply of 150 Standard Gauge Intermediate Cars compatible for suitable integration with the existing trains of BMRCL. The contract included the design and construction of the rail-based rapid transport system, and the supply, erection, commissioning and installation thereof. It is not necessary to examine the details and scope of the tender and the contract. 3.2 Under the terms of the contract, the petitioner agreed to reimburse the applic....
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....ition under Article 226 of the Constitution would be maintainable. 5.2 In support of the aforesaid submissions, reliance was placed on the following judgments: COMPILATION NO.1: (i) Adi Pherozshah Gandhi v. H.M.Seervai 1970 (2) SCC 484, of the Hon'ble Supreme Court, (ii) Bar Council of Maharashtra v. M.V. Dabholkar & Ors. (1975) 2 SCC 702, of the Hon'ble Supreme Court, (iii) Maharaj Singh v. State of Uttar Pradesh & Ors. (1977) 1 SCC 155, of the Hon'ble Supreme Court, (iv) Kikabhai Abdulali v. Income-tax Appellate Tribunal (1957) 32 ITR 762 (Bom), of Bombay High Court, (v) CIT v. N. Ch. R. Row & Co. [1983] 144 ITR 557 (Calcutta), of Calcutta High Court, (vi) Kone Elevator India (P.) Ltd v. State of Tamil Nadu [2014] 34 STR 641 (SC) (Constitution Bench), of the Hon'ble Supreme Court, (vii) BSES Ltd. (Now Reliance Energy Ltd) v. Fenner India Ltd and Anr. (2006) 2 SCC 728, of the Hon'ble Supreme Court, (viii) Card Protection Plan Ltd (CPP) v. Commissioners of Customs & Excise, Case C-349/96 dt. 25/02/1999, European Court Reports 1999 I-00973 [ECJ], (ix) Levob Verzekeringen BV and OV Bank NV v. Staat....
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.... of the service/supply, and the same was adjudicated by the AAR in favour of respondent No.4/applicant. Aggrieved by the said ruling, the Revenue preferred an appeal before the AAAR, wherein a ruling came to be passed classifying the supplies and services, attracting GST at rates varying from 5% to 28%. 6.1 It is submitted that, in view of the express provisions contained in Section 103 of the Act, the ruling rendered by the AAR or the AAAR is binding only on the applicant who had sought the advance ruling and on the concerned officer. It is contended that the decision of the AAR or the AAAR is a decision in personam and binds only the parties to the proceedings. 6.2 It is further submitted that the petitioner, being a third party, has no locus standi to challenge the ruling. It is also submitted that the dispute regarding the rate of GST emanates from the contractual obligations between the petitioner and respondent No.4, whereas what has been adjudicated by the AAR is only the classification of the supply and services. It is further submitted that, in the absence of any agreement between the petitioner and respondent No.4 regarding the classification of goods or services, t....
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....l be in respect of,-- (a) classification of any goods or services or both; (b) applicability of a notification issued under the provisions of this Act; (c) determination of time and value of supply of goods or services or both; (d) admissibility of input tax credit of tax paid or deemed to have been paid; (e) determination of the liability to pay tax on any goods or services or both; (f) whether applicant is required to be registered; (g) whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term. 98. Procedure on receipt of application.- (1) On receipt of an application, the Authority shall cause a copy thereof to be forwarded to the concerned officer and, if necessary, call upon him to furnish the relevant records: Provided that where any records have been called for by the Authority in any case, such records shall, as soon as possible, be returned to the said concerned officer. (2) The Authority may, after examining the application and the records called for and after....
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....d by any advance ruling pronounced under sub-section (4) of section 98, may appeal to the Appellate Authority. (2) Every appeal under this section shall be filed within a period of thirty days from the date on which the ruling sought to be appealed against is communicated to the concerned officer, the jurisdictional officer and the applicant: Provided that the Appellate Authority may, if it is satisfied that the appellant was prevented by a sufficient cause from presenting the appeal within the said period of thirty days, allow it to be presented within a further period not exceeding thirty days. (3) Every appeal under this section shall be in such form, accompanied by such fee and verified in such manner as may be prescribed. 101. Orders of Appellate Authority.- (1) The Appellate Authority 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 or referred to. (2) The order referred to in sub-section (1) shall be passed within a period of ninety days from the date of filing of the appeal under section 100 or a reference ....
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....pplicant or the concerned officer, irrespective of the consequences flowing from such ruling. 9.3 Such consequences may include an additional financial liability or even an alteration in the contractual obligations between the parties. In view of the specific language employed in Section 103, the advance ruling is effective and binding only in relation to the parties, facts and law as stated in the application and considered while rendering the advance ruling. Having regard to the legislative intent and the scope of the provisions, this Court does not find any scope for a third party either to claim the benefit of such ruling or to question the same. 9.4 Any financial implication arising by way of increased liability pursuant to an advance ruling is merely a consequence flowing from such ruling in the light of the contractual obligations between the parties. Chapter XVII has a definite and limited purpose, namely, to determine the liability under the Act in respect of a transaction proposed to be undertaken or already being undertaken. When the scheme of the entire Chapter confines the binding effect only to the applicant and the concerned officer, no independent grievance ca....
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....ersonam, and the decision/opinion of such authority is binding only on the parties to the said proceedings. While interpreting Section 103 of the GST, it has been held that once an assessee approaches the AAR or the AAAR, the decision rendered by such authorities is binding on the applicant and the concerned officer or the jurisdictional officer in charge of the office within whose jurisdiction the applicant is assessed to tax. 10.1 By statutory design under the enactments, the orders passed by the AAR or the AAAR, as the case may be, are binding not only on the applicant who seeks the clarification but also on the concerned jurisdictional officer under whose jurisdiction such applicant is assessed to tax. 10.2 The Calcutta High Court, in the case of Sarkar Diesel and Another vs. Deputy Commissioner, FMA 604/2024 dated 25.06.2024 has held that an advance ruling binds only the Department and the applicant who approached the AAR seeking a decision, and does not bind a third-party taxpayer. 10.3 The Bombay High Court, in the case of Jotun India Private Limited vs. Union of India and Others, reported in ([2023] 109 GSTR 191), while interpreting Section 103 of the Act, held as ....
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....ermissible. In that view of the matter, it cannot be held that the petitioner is an aggrieved person having the requisite locus standi to challenge the order passed by the Authority for Advance Ruling or the Appellate Authority for Advance Ruling. ANALYSIS OF THE JUDGMENTS CITED 11. We shall now examine the applicability of the judgments relied upon by the learned counsel for the petitioner before this Court. As noticed hereinabove, though the learned counsel for the petitioner has filed two compilations of judgments comprising fourteen judgments in the first volume and eleven judgments in the second volume, reliance was placed only on three judgments contained in the second compilation. Therefore, our discussion is confined to the applicability of the said three judgments. 12. In Naga Ltd. (supra) of the Madras High Court, firstly, there is no consideration of Section 103 of the Act. Secondly, in the said case, the exemption under which the benefit accrued to the petitioner therein was interpreted to be inapplicable at the instance of an application filed before the AAR by another person. Moreover, the Madras High Court, in Haji K.P.M. Abdul Kareem (supra), upon a detaile....
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....nt No.4 is placed on record as Annexure-D3. The stipulation in the agreement with regard to VAT/GST reads as under: "The contract price for spares shall include Basic Custom duty (at the concessional duty rate available under the Project Import Registration). However, the VAT payable will not be part of the contract price. VAT on spares as invoiced by M/s BEML Limited to BMRCL shall be reimbursed to M/s BEML Limited. In the event of GST being implemented, GST as applicable shall be reimbursed to M/s BEML Limited as invoiced by M/s BEML Limited to BMRCL In case of decrease/increase in the rate of Basic Custom Duty, the contract price shall be decreased/increased accordingly (ii) In case of indigenous spares, the contract price shall include the following duties and taxes: A Excise duties and CST on indigenous finished spares The contract price shall not include the VAT payable on the transaction between the M/s BEML Limited and BMRCL. BMRCL shall reimburse the VAT payable to M/s BEML Limited as invoiced by M/s BEML Limited. In the event of GST being implemented during the contract period, BMRCL shall reimburse t....
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....e Contractor to BMRCL. In case of decrease/increase in the rate of Basic Custom Duty, the contract price shall be decreased / increased accordingly. (ii) In case of indigenous spares, the contract price shall include the following duties and taxes: ⮚ Excise duties and CST on indigenous finished spares The contract price shall not include the VAT payable on the transaction between the Contractor and BMRCL. BMRCL shall reimburse the VAT payable to the Contractor as invoiced by the Contractor. In the event of GST being implemented during the contract period, BMRCL shall reimburse GST to the Contractor as invoiced by the Contractor to BMRCL. If required by BMRCL, the successful Bidder shall furnish the details of the taxes/duties/levies/cess etc, paid to the state Government, Government of India or any local bodies." 19. The Contract Agreement dated 25.03.2017 for the supply of 150 Standard Gauge Intermediate Cars is produced as Annexure-D5. The clause dealing with GST in the said agreement reads as under: "In the event of implementation of Goods & Service Tax (GST), BMRCL shall reimburse the applicable GST as inv....
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....n agreed under the contract is only that petitioner-BMRCL shall reimburse the applicable GST as invoiced by the contractor, namely respondent No.4. A similar arrangement existed even when VAT regime was in force. 21. The expression "applicable GST" can only mean the rate of GST applicable to the particular class of supply of goods or services as determined in accordance with law. It cannot be construed as a rate understood or mutually agreed upon by the parties. In fact, there was no such understanding between the parties, as neither the classification of the supply of goods or services nor the applicable rate of GST had been agreed upon. 22. For the purpose of ascertaining the classification of the supply of goods or services, respondent No.4 preferred an application before the AAR. The AAR thereafter issued a ruling classifying the supplies as goods or services and determining the applicable rates of GST. The said classification has been accepted by respondent No.4. Respondent No.4, though the applicant before the AAR, has not challenged the ruling rendered by the AAAR. When respondent No.4, being the supplier of the goods/services, has accepted the classification of the sa....