The Centre’s move to replace the Authority for Advance Rulings (AAR) with the Board for Advance Rulings comprising revenue department officials has raised qualitative concerns among tax advocates and practitioners.
The AAR, which pronounces binding rulings on applications of non-residents and residents, consists of revenue members and members from the judiciary.
There are three benches of the authority and the benches cannot function if the post of chairman or vice-chairman is vacant.
Retired judges of the Supreme Court, retired chief justice of a high court or retired judges of the high court who have served for at least seven years are eligible for appointment as the chairman of the benches.
At the Union budget, the government has decided to dismantle the AAR and has proposed the constitution of one or more Board for Advanced Rulings.
Each board is stated to constitute two members, both being an officer not below the rank of chief commissioner. Unlike the AAR, the orders of the board shall not be binding and the applicant, if aggrieved, can appeal against a ruling before the high court.
The government's rationale is to impart more efficiency in the system. According to department officials, the posts of chairman and vice-chairman at the benches of the AAR often remain vacant for a long time because of non availability of eligible persons. This delays the passing of orders.
However, industry observers point out the lack of balance because of the absence of judicial members in the proposed board and the freedom of an aggrieved applicant to go to the high court against a ruling mean more pile-up of cases at the judiciary level.
“When we have somebody from the judicial background, then there is more faith that they will be deciding judiciously. But when everything is with the income tax people who have served their whole life in revenue authorities, what can we expect from them?” tax advocate Narayan Jain said at a panel discussion organised by the Calcutta Club and the Concern for Calcutta on Sunday.