Appellate authority dismisses appeal for advance ruling application citing ongoing investigations.

The appellate authority upheld the rejection of an application for advance ruling under the CGST Act, 2017, citing ongoing investigations by DGGSTI into the appellant's tax liabilities. The appeal was deemed non-maintainable as it was not against a ruling pronounced under the relevant section. Consequently, the appeal was dismissed without delving into the merits of the case, affirming the order of the Advance Ruling Authority.

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Issues Involved:
1. Whether the application for advance ruling is barred under the proviso to Section 98(2) of the CGST Act, 2017.
2. The applicable rate of tax for a sub-contractor executing works contract pertaining to a dam, where the principal contractor is liable for tax at 12%, for the period from 22-08-2017 to 25-01-2018.

Issue-wise Detailed Analysis:

1. Bar under Proviso to Section 98(2) of the CGST Act, 2017:

The appellant contended that the mere issuance of a letter by the DGGSTI authorities cannot be considered as any proceedings within the meaning of the proviso to Section 98(2) of the CGST Act, 2017. However, the records showed that the Additional Assistant Director, DGGI, Regional Unit, Indore, issued a summon under Section 70 of the CGST Act, 2017, indicating an inquiry into GST evasion. Section 70(2) clarifies that such an inquiry is deemed a "judicial proceeding" under Sections 193 and 228 of the Indian Penal Code. Therefore, the appellate authority disagreed with the appellant's contention and upheld that the ongoing investigation by DGGSTI qualifies as proceedings under the proviso to Section 98(2).

The Deputy Director of DGGSTI confirmed that proceedings were initiated against the appellant regarding the wrong availment of a lower GST rate of 12% for works contract services provided to the government, which should have been taxed at 18% for the period in question. Since the investigation was ongoing, the appellate authority found that the Advance Ruling Authority correctly rejected the application under the first proviso to Section 98(2) of the CGST Act, 2017.

2. Applicable Rate of Tax for Sub-Contractor:

The appellant sought a determination of the applicable tax rate for a sub-contractor executing a works contract for a dam, where the principal contractor is liable for a 12% tax rate, for the period from 22-08-2017 to 25-01-2018. The appellant argued that the issue was purely a question of law and should not be barred by Section 67 proceedings. They cited various authorities and case laws to support their claim that differences in the interpretation of law do not constitute an intent to evade tax.

However, the appellate authority noted that the Advance Ruling Authority had rejected the application based on the ongoing proceedings by DGGSTI, which were investigating the appellant's tax liabilities. The appellate authority also referred to Section 100(1) of the CGST Act, 2017, which allows appeals only against rulings pronounced under sub-section (4) of Section 98. Since the Advance Ruling Authority had rejected the application under Section 98(2) and not pronounced any ruling under Section 98(4), the appeal was found to be non-maintainable.

Conclusion:

The appellate authority concluded that the appeal was not maintainable under the first proviso to Section 98(2) and Section 100(1) of the CGST Act, 2017. Therefore, without examining the merits of the case, the appeal was dismissed. The order of the Advance Ruling Authority dated 10.12.2020 was upheld, and the appeal filed by the appellant was dismissed on all accounts.

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