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AUTHORITY FOR ADVANCE RULINGS
(CENTRAL EXCISE, CUSTOMS AND SERVICE TAX)
Hon'ble Mr. Justice Syed Shah Mohammed Quadri (Chairman)
Mr. Somnath Pal (Member)
Dr. Brahm Avtar Agrawal (Member)
Order No. AAR/02(ST)/2006
Application No. AAR/03/ST/2006
(Per Dr. Brahm Avtar Agrawal)
The crucial question for consideration in the instant case is as to whether the application made by Pfizer Limited for obtaining an advance ruling under sub-section (1) of section 96C of the Finance Act, 1994 ("Act") deserves admission or rejection.
2. The applicant, a joint venture Indian company, has stated the question, on which advance ruling is sought, as below:
"Which clause in Section 65 to the Chapter V of the Finance Act, 1994 will be applicable to the supply of technical know-how, for the purposes of classification, since the same is not classifiable under clause (55a) for Intellectual Property Services?"
3. The applicant has entered into agreements with its foreign collaborators for the supply of the technical know-how and assistance for use in the manufacture of certain pharmaceutical products the Indian company is engaged in.
4. The comments on the application were furnished by the Commissioner of Service Tax, Mumbai.
5. Before the question as to classification of service specified in the application could be adopted for examination leading to pronouncement of advance ruling thereon, it was felt necessary to call upon the applicant, and a notice was issued to it, to show cause as to how the application was maintainable, vide our Order dated 11.07.2006. This Order was passed as on examination of the application and the comments of the Commissioner it prima facie appeared to us that:
(i) first proviso to sub-section (2) of section 96D of the Act was attracted; and
(ii) clause (a) of section 96A of the Act was attracted as admittedly the activity was an on-going service.
6. Although two opportunities of personal hearing were extended to the applicant, it chose not to avail of any of them. However, the applicant in its letter dated 06.08.2006 replied to the two grounds as under:
"(i) The case as mentioned in the letter dated March 27, 2006 of the Commissioner of Service Tax is for an earlier agreement and earlier period. No case is pending for the agreement forming part of the advance ruling application. Hence it is submitted that there is no case pending before any Court/Tribunal pertaining to the present agreement.
(ii) The activity of supply of technical know how is an on-going activity."
7. The first ground relates to the jurisdictional limitation of the Authority flowing from the provisions of sub-section (2) of section 96D of the Act, which reads as follows:
"The Authority may, after examining the application and the records called for, by order, either allow or reject the application:
Provided that the Authority shall not allow the application where the question raised in the application is,-
(a) already pending in the applicant's case before any Central Excise Officer, the Appellate Tribunal or any Court;
(b) the same as in a matter already decided by the Appellate Tribunal or any Court:
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."
8. A perusal of the provisions, extracted above, would show that under the first proviso to sub-section (2) of section 96D of the Act, the Authority cannot allow the application or, in other words, cannot entertain the application for pronouncing advance ruling on the question specified in the application under sub-section (4) thereof, if the question raised in the application is either already pending in the applicant's case before any Central Excise Officer or the Appellate Tribunal or any Court, or the question is the same as in a matter already decided by the Appellate Tribunal or any Court. The Commissioner concerned in his letter dated 23.03.2006 has taken the stand that the question raised in the application is already pending in the applicant's case before the Bombay High Court as well as has already been decided by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), West Regional Bench At Mumbai, vide its Order No.A/332/WZB/2005-C-II dated 20.05.2005. The said Order of the CESTAT is under appeal before the Bombay High Court.
9. A perusal of the papers in this connection, shows that the precise question before the Departmental Officers and the CESTAT was as to whether the Indian company received "consulting engineer's service" from outside India, that is, the service to a client in relation to advice, consultancy or technical assistance in any manner in one or more disciplines of engineering, which is a "taxable service". It was held by the CESTAT that neither the foreign company nor the Indian company was a "consulting engineer". Classification of the service in question as "intellectual property service" was neither in issue, nor considered by any of the authorities. The word "same" lexically means "identical", "not different" or "very similar", vide the Concise Oxford Dictionary and the Chambers 21st Century Dictionary. The Black's Law Dictionary defines the word "same" as "the very thing just mentioned or described". In our view, the question raised in the application under consideration cannot be termed as the same as in a matter already decided; the question of the same being already pending in a Court does not arise. Therefore, the first proviso to sub-section (2) of section 96D of the Act is not attracted, and the application cannot be disallowed on the basis of the first ground.
10. The second ground concerns the definition of the expression "advance ruling" as given in clause (a) of section 96A of the Act, which reads thus:
' "advance ruling" means the determination, by the Authority, of a question of law or fact specified in the application regarding the liability to pay service tax in relation to a service proposed to be provided, by the applicant.'
11. A plain reading of the above definition makes it clear that "advance ruling" means the determination, by the Authority, of a question of law or fact specified in the application regarding the liability to pay service tax in relation to a service proposed to be provided by the applicant. As the activity in question is admittedly an on-going service, no question seeking advance ruling thereon can be entertained by the Authority. For this reason, the application deserves rejection.
12. Accordingly, the application is rejected.
(Somnath Pal) (Justice S.S.M. Quadri) (Dr. B.A. Agrawal)
Member Chairman Member
Pronounced in the open court on the 29th day of August, 2006.