Authority for Advance Ruling Jurisdiction — Application for Ruling — Discretionary — Holding and subsidiary.

The applicant, a subsidiary of a subsidiary of a Dr. K. Shivaram Ajay R. Singh Advocates Allied laws Govt. company, filed an application seeking a ruling by the Authority for Advance Rulings on its proposed transactions. The maintainability of the application was challenged by the Dept. contending that since a question identical to the one sought to be raised by the applicant was pending before the Customs, Excise and Service Tax Appellate Tribunal at the instance of the company of which the applicant was a subsidiary, the application by the applicant raising the identical question was barred by the proviso to s.s (2) of section 96D of the Finance Act, 1994. The AAR on the stated facts held that the question sought to be raised was pending before the Tribunal, though at the instance of the holding company of the applicant. If the argument of the applicant was accepted, the ruling to be given by the Authority would only bind the applicant and the authorities under the Act would be bound to implement that ruling only in the case of the applicant.

That would mean that in the appeal filed by the holding company of the applicant involving the identical question, the Tribunal was free to render a ruling ignoring what was being ruled by the Authority. That could lead to incompatible decisions concerning the same question, being rendered by two different authorities on an identical transaction. Therefore, in the facts and circumstances of the case, such a situation should be avoided. This would be in furtherance of the spirit of enacting the bar to the jurisdiction of this Authority to entertain an application for advance ruling, when the identical question was pending before an authority under the Act, the Tribunal or Court. Therefore the application was to be rejected exercising the discretion of the Authority not to allow the application u/s.96D(2) of the Act for the purpose of giving a ruling u/s.96D(4) of the Act.