2018 (9) TMI 975 - AAR - GST

Application for Advance Ruling Rejected Due to Ongoing Investigations

In Re: Sterlite Technologies Limited

The Authority rejected the application for advance ruling by the applicant under Section 98 of the CGST Act, as proceedings were already initiated against ... Maintainability of Advance Ruling Application - proceedings are already initiated against them before the filing of their present application - Section 98 of the CGST Act - Levy of GST - excess length of Optic Fibre (OF) - independent customers - distinct persons in terms of Schedule I provisions - CENVAT credit. Held that:- It is very clear that proceedings under the relevant provisions of this Act are initiated in respect of the application prior to their filing of this application for Advance Ruling - the application filed by the applicant is not maintainable as per the provisions of Section 98 of the CGST Act, as proceedings are already initiated against them before the filing of their present application. The applicant's application is liable for rejection as per proviso to section 98 (2) of the CGST Act and therefore cannot be entertained by this authority and is accordingly rejected being non-maintainable. Issues Involved:1. Whether GST is required to be separately discharged on the excess length of Optic Fibre (OF) when the cost is already included in the price charged to customers.2. Whether GST is required to be separately discharged on the excess length of OF when the cost is included in the price charged to distinct persons as per Schedule I.3. If GST is not payable separately on the excess length, whether the company must reverse proportionate credit to the extent of the supply of such excess length.Detailed Analysis:1. GST on Excess Length of OF to Independent Customers:The applicant, Sterlite Technologies Limited, questioned whether they need to discharge GST on the excess length of OF, even though the cost is included in the price charged to independent customers. The company manufactures OF and OFC, and due to practical challenges, the OF is supplied with a marginally surplus length. The applicant argued that the cost of manufacturing the excess length is already included in the price charged to customers, and thus, no separate GST should be discharged on the excess length.2. GST on Excess Length of OF to Distinct Persons:Similarly, the applicant queried if GST needs to be discharged separately on the excess length of OF when supplied to its own units, which are considered distinct persons under Schedule I of the GST Act. The company stated that the assessable value is determined based on the 'Open Market Value' per Rule 28(a) of the CGST Rules, which is independent of the cost incurred for manufacturing the excess length.3. Reversal of Proportionate Credit:The applicant also asked if GST is not payable separately on the excess length, whether they are required to reverse proportionate credit to the extent of the supply of such excess length. The applicant emphasized that the price charged to customers includes the cost of the excess length, and customers can avail of Input Tax Credit (ITC) on the GST charged, which includes the cost of the excess length.Authority's Observations:- The jurisdictional officer opposed the admission of the application, citing that an Anti-Evasion investigation is already underway on the same issue. As per proviso to Section 98 of the CGST Act, the Authority for Advance Ruling shall not admit the application if the question raised is pending or decided in any proceedings under the Act.- The officer highlighted that searches were conducted at the applicant's premises, and statements of key persons were recorded under Section 70 of the CGST Act, indicating ongoing investigation.- The applicant acknowledged the initiation of proceedings but contended that no proceedings could be considered initiated until a Show Cause Notice is issued.Conclusion:The Authority concluded that the application is not maintainable under Section 98 of the CGST Act, as proceedings were already initiated against the applicant before filing the application. The Authority emphasized that the law clearly intends to prevent the admission of applications if proceedings are pending on the same issue. Consequently, the application was rejected as non-maintainable.Order:The application for advance ruling made by the applicant is rejected under the provisions of sub-section 2 of Section 98 of the CGST Act, 2017.