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2014 (5) TMI 416 - HC - VAT and Sales TaxEligibility for Input Tax credit Other similar fuels Classification - Section 67(4) of AP VAT Act r/w Section 245S of Income Tax Act Advance Ruling Authority (ARA) Decision Binding on 3rd parties or not Interpretation of Statute - Whether decision of the ARA will bind the third parties or not Held that - According to Section 67(4), decision of the ARA would be binding- on the applicant who had sought for clarification, on all the officers other than the Commissioner and in respect of the goods or transactions in relation to which a clarification was sought Therefore, the decision of the ARA will be binding upon any dealer, even though he has not applied for ruling, if he deals in the same goods in relation to which the decision has been rendered - Since the literal reading of the above statutory provisions emerges an intelligible result, the Court cannot interpret the same in other way - Where the words of the statute are clear and unambiguous, recourse cannot be had to the principles of interpretation other than the literal rule. When the Legislature makes a provision not intending to apply the principles of natural justice, this has to be accepted howsoever unpleasant it is - The intention of the Legislature is to be gathered from the language employed having regard to the context in connection with which it is employed - The primary rule of construction is that the intention of the legislation must be found in the words used by the Legislature itself Relyied upon Unique Butyle Tube Industries P. Ltd. v. U.P. Financial Corporation 2002 (12) TMI 508 - SUPREME COURT OF INDIA - In M/s. Hindustan Unilever Limited, the ARA has given a decision that the LPG is one of the categories of other similar fuels, hence, the said amended Rule is applicable in order to disqualify any dealer to get the input tax credit - Therefore, going by the aforesaid interpretation, although the petitioners are non-applicants, the decision is binding upon them. Applicability of Section 245S of Income Tax Act Held that - The persons, who shall be bound by the said authority, are limited because the word only after the word binding makes it clear that it would be binding on the applicant who had sought it, thereby no other person, and again on the Commissioner and the other income tax authorities subordinate to him in respect of the applicant and the said transaction - Therefore, it is binding in case of particular transaction where any assessee or income tax authorities were the parties - It is very significant that the word goods like in Section 67(4) of the Act is missing in Section 245S of the Income Tax Act. The Legislature is deemed to intend and mean what it says - The need for interpretation arises only when the words used in the statute are, on their own terms, ambivalent and do not manifest the intention of the Legislature Relied upon ITC Ltd. v. Commissioner of Central Excise 2004 (9) TMI 103 - SUPREME COURT OF INDIA - Therefore, the Court cannot intend otherwise than the Legislature - The Courts should not add words to statute or add words into it, which are not there, especially when a literal reading thereof produces an intelligible result - Even if there is a defect or an omission in the statute, the Court cannot, ordinarily, correct the defect or supply the omission (Refer Satheedevi v. Prasanna 2010 (5) TMI 758 - SUPREME COURT - Therefore, provision of the statute has to be accepted and applied as it is - The decision means, decision rendered on the ratio and that part is binding - Such decision or judgment of the Supreme Court or High Courts in a particular point of law is binding upon not only the parties thereto but also the non-parties on a similar identical point although they are not heard - In view of the foregoing discussion, it is hold that decision of ARA rendered on the application of Hindustan Unilever Limited in AR.Com.6/2011 is binding upon other non-applicant dealers who are dealing in LPG until it is set aside. Impact of ARA decision - Pendency of appeal - Whether the pendency of appeal against the decision of ARA before appropriate Tribunal has got any impact as to applicability of the same Held that - In view of proviso to clause (iii) of Section 67(4) if the dealer, at whose instance the ruling was rendered, files appeal, the binding effect of the same ceases temporarily Relying upon TIRUPATI CHEMICALS 2010 (11) TMI 864 - ANDHRA PRADESH HIGH COURT - The said decision of the ARA, so long as the appeal is not decided, cannot be enforced though it is binding, meaning thereby, it operates as stay automatically - Since the Hindustan Unilever Limited has already preferred an appeal and the same is pending, naturally the decision of the ARA will automatically remain stayed, but that does not mean that the decision is obliterated and erased, and so long as it is not set aside, it remains, but may not be operative - Thus the orders, which have been passed relying on the decision of the ARA, will not be operative to the extent of which reliance has been placed. Upon reading of the entire machinery of Section 67 of the Act, it appears that the petitioners, being non-parties in the said Advance Ruling proceedings, cannot prefer any appeal directly to Tribunal against the decision of the ARA thereunder, but their remedy lies to prefer appeal under Section 33 after preferring an appeal u/s 31 of the Act - The decision of ARA can be challenged before Tribunal in the appeal itself - Therefore, writ petitions are disposed of giving liberty to all the petitioners to resort to alternative remedy in accordance with law This Court has not decided the case on merits nor decided the legality and validity of the decision of the ARA, since very subject is pending in appeal before Tribunal Stay granted.
Issues Involved:
1. Whether LPG can be treated as "other similar fuels" under Rule 20(2)(q) of the Andhra Pradesh Value Added Tax Rules, 2005. 2. Binding nature of the Advance Ruling Authority's (ARA) decision on non-applicant dealers. 3. Impact of pending appeals against ARA decisions on their binding nature. Issue-wise Detailed Analysis: 1. Whether LPG can be treated as "other similar fuels" under Rule 20(2)(q) of the Andhra Pradesh Value Added Tax Rules, 2005: The petitioners, registered dealers under the Andhra Pradesh Value Added Tax Act, 2005, contended that LPG should not be classified as "other similar fuels" under Rule 20(2)(q). They argued that LPG is neither used in furnaces or boilers of factories nor shares similar properties with furnace oil and LSHS. The petitioners asserted that the decision of the ARA in the case of M/s. Hindustan Unilever Limited, which classified LPG as a similar fuel, was factually incorrect and absurd. They further argued that the principle of ejusdem generis should apply, meaning "other similar fuels" should only include fuels with similar properties and characteristics to furnace oil and LSHS, which LPG does not possess. 2. Binding nature of the Advance Ruling Authority's (ARA) decision on non-applicant dealers: The petitioners argued that the decision of the ARA should only bind the applicant who sought the ruling, as per the analogy with Section 245S of the Income Tax Act. They contended that Section 67(4) of the Andhra Pradesh Value Added Tax Act should be interpreted similarly, meaning the ARA's decision would not bind third-party dealers. The petitioners cited the Supreme Court decision in COLUMBIA SPORTSWEAR COMPANY v. DIRECTOR OF INCOME TAX, which held that the ARA's decision under the Income Tax Act binds only the applicant and relevant tax authorities, not third parties. The State countered that Section 67(4) of the Act is distinct from Section 245S of the Income Tax Act, particularly due to the inclusion of the term "goods" in Section 67(4)(ii). This implies that the ARA's decision binds any dealer dealing with the same goods, irrespective of whether they sought the ruling. The Division Bench of the Andhra Pradesh High Court in TIRUPATI CHEMICALS v. DEPUTY COMMERCIAL TAX OFFICER supported this view, holding that the ARA's ruling binds all dealers dealing with the same goods or transactions. 3. Impact of pending appeals against ARA decisions on their binding nature: The petitioners contended that the binding effect of the ARA's decision should cease due to the pending appeal by Hindustan Unilever Limited. The court examined Section 67(4) of the Act and concluded that the decision of the ARA remains binding until set aside but is temporarily stayed during the pendency of an appeal. This interpretation aligns with the proviso of Section 67(4)(iii), which states that the binding effect ceases if an appeal is filed within 30 days. Therefore, the court held that the ARA's decision in the case of Hindustan Unilever Limited remains binding on other dealers dealing with LPG but is not operative during the pendency of the appeal. The court advised the petitioners to resort to alternative remedies, such as appealing under Sections 31 and 33 of the Act, and allowed them to seek analogous hearings with the appeal of Hindustan Unilever Limited. Conclusion: The court concluded that the decision of the ARA regarding LPG being classified as "other similar fuels" under Rule 20(2)(q) is binding on all dealers dealing with LPG, despite the pending appeal. The court provided a pathway for the petitioners to challenge the decision through the appropriate appellate mechanisms and granted them an extension to file appeals, considering the time the writ petitions were pending.
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