2018 (9) TMI 975 - AAR - GST

Application for Advance Ruling Rejected Due to Ongoing Investigations

The Authority rejected the application for advance ruling by the applicant under Section 98 of the CGST Act, as proceedings were already initiated against ... Admissibility of advance ruling application - Authority shall not admit application where question is pending in other proceedings - pending investigation/initiated proceedings - opportunity of hearing before rejectionAdmissibility of advance ruling application - Authority shall not admit application where question is pending in other proceedings - pending investigation/initiated proceedings - Whether the advance ruling application was maintainable in view of investigations/proceedings already initiated against the applicant on the same question. - HELD THAT: - The Authority found on the material before it, including admissions by the applicant and departmental records, that searches and consequent investigative actions were carried out prior to filing of the application and statements of key persons were recorded under the GST Act. The proviso to the admissibility provision prevents the Authority from admitting an application where the question raised is already pending in any proceedings in the applicant's case. The Authority rejected the contention that proceedings are not 'initiated' until a show-cause notice is issued, observing that inquiries, searches and recording of statements constitute initiation of proceedings and their culmination in a charge memo is not a prerequisite for the proviso to apply. Having concluded that proceedings on the same issue were pending before the department at the time the application was filed, the Authority held the application non-maintainable and liable to be rejected after affording opportunity of hearing as required. [Paras 11, 12, 14]Application rejected as non-maintainable because proceedings on the same question were already pending at the time of filing.Final Conclusion: The Authority refused to admit the applicant's request for advance ruling and rejected the application under the admissibility proviso, holding it non-maintainable because departmental proceedings on the same issue had been initiated before the filing of the application. 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.