TaxTMI 
TaxTMI 
TaxTMI 
The Hon’ble Rajasthan High Court in Mr. Tej Jain S/o Gyan Chand Jain Versus Chief Commissioner Of Cgst, Chief Commissioner Of Sgst and Rajasthan Authority For Advance Ruling, Jaipur - 2025 (6) TMI 1338 - RAJASTHAN HIGH COURT held that the observations on Input Tax Credit (“ITC”) in para 6.8 of the Order passed by the Appellate Authority for Advance Ruling (“AAAR”) were to be expunged given the fact that the question pertaining to ITC was not originally dealt with by the Authority for Advance Ruling (“AAR”) and hence the AAAR had travelled beyond the grounds of challenge in the appeal.
Facts:
Tej Jain ('the Petitioner'), engaged in the business of purchase and sale of old and used motor vehicles, filed an application before the AAR seeking clarification on whether the cost incurred on refurbishment and the amount paid to the car owner would be included in the purchase price so as to compute the margin for the purposes of valuation and levy under Notification No. 08/2018 – Central Tax (Rate) dated January 25, 2018.
The AAR answered the question in negative in its order dated August 27, 2021. The Petitioner appealed, but the AAAR upheld the ruling of the AAR in its order dated December 14, 2021. However, in para 6.8 of the Order passed by the AAAR, the AAAR made certain observations on the eligibility of ITC when opting for the margin scheme under the above Notification No. 08/2018 – Central Tax (Rate) dated January 25, 2018, clarifying that the benefit of the notification is optional and ITC can only be claimed if the Petitioner does not wish to avail the benefit provided by Notification No. 08/2018 – Central Tax (Rate) dated January 25, 2018.
The Petitioner filed the present writ petition under Article 226 challenging the orders of the AAR and the AAAR, contending that the issue with respect to ITC was never raised before the AAR, and the AAAR could not have ruled on it. The Revenue did not dispute that the issue of ITC was not part of the original application or the appeal filed before the AAAR.
Issue:
Whether the AAAR erred in making observations on ITC under Notification No. 08/2018 – Central Tax (Rate) dated January 25, 2018 in its Order when the same was not part of the appeal or originally contended before the AAR?
Held:
The Hon’ble Rajasthan High Court in Mr. Tej Jain S/o Gyan Chand Jain Versus Chief Commissioner Of Cgst, Chief Commissioner Of Sgst and Rajasthan Authority For Advance Ruling, Jaipur - 2025 (6) TMI 1338 - RAJASTHAN HIGH COURTheld as under:
- Observed that, the only question raised by the Petitioner before the AAR and AAAR was whether refurbishment costs and cost paid to the owner of the car are includible in the purchase price for calculating margin under Notification No. 08/2018 – Central Tax (Rate) dated January 25, 2018.
- Noted that, the Petitioner had not raised any question regarding availment or disallowance of ITC, and the observations of the AAAR in its order had travelled beyond the scope of the appeal.
- Held that, the observations in para 6.8 of the AAAR order, regarding ITC, were uncalled for and are liable to be expunged to that extent.
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