Marine Paint As Part Of Vessel? Bombay High Court Confirms AAAR Decision
The Bombay High Court has dismissed the writ petition challenging the advance ruling given by the Maharashtra Appellate Authority for Advance Ruling (AAR).The division bench of Justice Nitin Jamdar and Justice Gauri Godse has observed that the authority and the appellate authority followed the entire procedure and that full opportunity was given to the petitioner. There was no evidence of...
The Bombay High Court has dismissed the writ petition challenging the advance ruling given by the Maharashtra Appellate Authority for Advance Ruling (AAR).
The division bench of Justice Nitin Jamdar and Justice Gauri Godse has observed that the authority and the appellate authority followed the entire procedure and that full opportunity was given to the petitioner. There was no evidence of a violation of natural justice principles due to a lack of opportunity to be heard.All points put forth by the petitioner as to why anti-fouling paint should be considered part of the ship were taken into consideration, and the authority and the Appellate Authority took a particular view of the matter.
The petitioner manufactures and supplies marine paint used on the hull of the ships. The petitioner applied for an advance ruling that marine paints supplied by the petitioner should be considered part of the ship or vessel and should be classified accordingly. Both the Advance Ruling Authority and the Appellate Authority have rejected the interpretation of the Petitioner. They have held that the marine paint supplied by the petitioner cannot be classified as part of the ship.
The Maharashtra Authority for Advance Ruling on Goods and Service Tax held that merely because anti-fouling paints are mandatory in the Merchant Shipping Act, that does not make them a part of the ship.
The Appellate Authority held that marine paint is a standalone commodity with an independent existence that is perceived as an independent product rather than a part of the ship and that the marine paint or anti-fouling paint is not an integral part of the ship. The Appellate Authority observed that the ship could sail without an anti-fouling paint, which only adds comfort and durability to the ship and is not an indispensable part of it.
The petitioner contended that there is a fundamental error committed by both authorities in holding that the marine paint (anti-fouling paint) manufactured by the petitioner is not a part of the ship. The purpose for which the anti-fouling paint is required would clearly show that it is an essential part of the ship. It is mandatory that the anti-fouling paint be applied to the ship, without which the ship cannot sail.
The department contended that the scope of writ jurisdiction against the order passed by the authority and the appellate authority is extremely broad and that the merits of the findings cannot be considered in writ jurisdiction.
The advance ruling pronounced by the authority and the appellate authority shall be binding only on the applicant who has sought it for any matter under section 97(2) for advance ruling and the concerned officer or the jurisdiction officer in respect of the applicant. Section 104 lays down that where the applicant or appellant obtains the advance ruling pronounced by the authority or the appellate authority by fraud, suppression of material facts, or misrepresentation of facts, the authority may declare such a rule to be void ab initio. Therefore, the legislative scheme indicates that the advance ruling is distinct from the appeal and revision. The order is binding only on those specified under Section 103.
The court has held that the authority has correctly focused on the meaning of the word "part" in terms of classification and has held that, as a matter of mechanics, marine paint is not necessary to make the vessel operative. Both authorities have proceeded on the basis that there is a distinction between what makes the whole operational and what makes the whole legal to use. The petitioner is mixing up legality with mechanics.
The court held that the scrutiny in writ jurisdiction of the orders passed by the authority and the appellate authority is minimal. The petitioner, who requested an advance ruling on which entry the marine paint should fall under, was given a full hearing.
Case Title: Jotun India Private Limited Versus The Union of India
Citation: Writ Petition No. 12691 Of 2019
Date: 22.12.2022
Counsel For Appellant: Senior Advocate D.B.Shroff
Counsel For Respondent: Panel Counsel Shruti Vyas
Citation: 2022 LiveLaw (Bom) 523