Supreme Court Again Dismisses Revenue SLP in JAO–FAO Controversy: Final Word Still Awaited
The Supreme Court has once again dismissed a Revenue Special Leave Petition (SLP) in the long-drawn JAO–FAO controversy, keeping the fate of this contentious issue uncertain even as a larger batch of appeals awaits adjudication before another Bench.
The Recent Development
On 18th August 2025, a Bench of the Supreme Court led by Justice J.B. Pardiwala dismissed a Revenue SLP challenging a Bombay High Court ruling. The Bombay High Court had followed the precedent laid down in Hexaware Technologies Ltd., which held in favour of the taxpayer on the jurisdictional aspect concerning the Jurisdictional Assessing Officer (JAO) and the Faceless Assessing Officer (FAO).
The SLP was dismissed by the Supreme Court not only on the ground of delay, but also on merits, thereby reinforcing the consistent trend of judicial reluctance to reopen issues already settled by the High Courts.
It is pertinent to note that just a few weeks earlier, the same Bench had dismissed another Revenue SLP on a similar issue. In that matter, the Revenue has now filed a Miscellaneous Application seeking restoration of its appeal, requesting that it be tagged along with the batch of nearly 700 Revenue appeals currently pending before a different Bench of the Supreme Court led by Justice B.V. Nagarathna.
The Larger Context: Pending Appeals before SC
The JAO–FAO controversy has led to widespread litigation across the country, with taxpayers challenging the validity of assessments framed by FAOs without proper jurisdictional sanction. Several High Courts, including Bombay, Delhi, and others, have consistently ruled in favour of taxpayers, often relying on the principles enunciated in Hexaware.
In response, the Revenue has filed close to 700 appeals before the Supreme Court, seeking clarity and reversal of the taxpayer-friendly decisions. These appeals are currently pending adjudication before Justice B.V. Nagarathna’s Bench.
The recent dismissal by Justice Pardiwala’s Bench therefore raises an important question: should such SLP dismissals be seen as a definitive pronouncement on the controversy, or are they merely case-specific outcomes awaiting consolidation with the main batch of appeals?
Legal Effect of the Dismissal
1. Dismissal of SLP and Precedential Value
It is a well-settled principle that dismissal of an SLP by the Supreme Court, whether on delay or on merits, does not constitute a binding precedent under Article 141 of the Constitution. It merely signifies that the Apex Court did not find sufficient grounds to interfere in that particular case. Therefore, while the dismissal strengthens the taxpayer’s immediate case, it does not conclusively settle the issue for all.
2. Reinforcement of High Court Rulings
Nonetheless, repeated dismissals on similar grounds indirectly lend weight to the High Court rulings, thereby boosting the confidence of taxpayers who have relied upon them. Revenue’s repeated failure to secure leave from the Apex Court creates persuasive value for taxpayers in ongoing litigation.
3. Uncertainty Continues
Since the larger batch of appeals is still pending before Justice Nagarathna’s Bench, the final authoritative word on the controversy is yet to come. Until then, both Revenue and taxpayers remain in a state of uncertainty, with outcomes differing across cases depending on the stage of litigation.
Practical Implications for Taxpayers and Revenue
• For Taxpayers:
The dismissals provide short-term relief and a strong defense in ongoing and future litigation. Taxpayers can continue to rely on High Court rulings such as Hexaware, and may argue that the Supreme Court’s repeated dismissals indicate judicial disinclination to accept Revenue’s interpretation.
• For Revenue:
These setbacks highlight the difficulty of reversing well-reasoned High Court rulings. However, Revenue’s strategy remains focused on securing a definitive ruling from the larger Bench hearing the consolidated appeals. The Miscellaneous Applications for restoration also reflect the Department’s determination to keep the issue alive until an authoritative pronouncement is delivered.
• For the Legal System:
The continued pendency of nearly 700 cases underscores the urgency of an early resolution. Divergent outcomes-some cases being closed due to SLP dismissals while others remain tagged with the larger batch-create inconsistencies that add to litigation burdens.
Conclusion
The latest dismissal of the Revenue’s SLP in the JAO–FAO controversy is significant, but not conclusive. While it provides comfort to taxpayers and affirms the reasoning of the High Courts, it does not settle the law of the land. The final word will come only from the Bench of Justice B.V. Nagarathna, which is seized of the batch of 700 appeals filed by the Revenue.
Until then, taxpayers can take cautious comfort in the trend of dismissals, even as both sides await the much-anticipated Supreme Court ruling that will ultimately decide the fate of the JAO–FAO controversy.
