Appellate authority voids advance ruling for "Un-fried Fryums" due to procedural errors.

The appellate authority declared the advance ruling by GAAR as void ab initio due to the appellant's suppression of material facts and the inadmissibility of the application under Section 98(2) of the CGST Act, 2017. The classification of the product as "Un-fried Fryums" and the applicable GST rate of 18% were upheld, but the ruling itself was invalidated due to procedural impropriety.

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Issues Involved:
1. Classification of "Papad" of different shapes and sizes under the Customs Tariff Act, 1975.
2. Applicable rate of CGST and SGST on the supply of such "Papad".
3. Validity of the advance ruling given by GAAR in light of pending proceedings by DGGI.
4. Admissibility of the application for advance ruling under Section 98(2) of the CGST Act, 2017.
5. Alleged suppression of material facts by the appellant.

Detailed Analysis:

1. Classification of "Papad":
The appellant, engaged in manufacturing and trading "Papad" of various shapes and sizes, contended that their product should be classified under Chapter Tariff Heading 1905 of the Customs Tariff Act, 1975. They argued that their product, being semi-cooked and needing further cooking, should be exempt from tax as per Notification No. 02/2017-CT (Rate) dated 28.06.2017.

GAAR's Ruling:
GAAR observed that "Papad" has not been defined under the Customs Tariff Act, 1975, CGST Act, 2017, or relevant notifications. They applied the common parlance test and concluded that the product in question is "Un-fried Fryums" and not "Papad", classifiable under Tariff item 21069099.

2. Applicable Rate of CGST and SGST:
GAAR determined that the applicable GST rate for "Un-fried Fryums" is 18% (CGST 9% + GGST 9% or IGST 18%) as per Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate).

3. Validity of Advance Ruling:
The appellant challenged the advance ruling, arguing that GAAR wrongly applied the trade parlance theory, did not follow the Rules of Interpretation, and based its decision on incorrect legal precedents. They also claimed that the GAAR did not consider their submission regarding pending proceedings by DGGI.

4. Admissibility of the Application:
The appellate authority examined whether the application for advance ruling was admissible under Section 98(2) of the CGST Act, 2017. It was found that the appellant had not disclosed the ongoing proceedings by DGGI at the time of filing the application. The authority noted that the proceedings by DGGI, which started on 17.02.2020, were related to the same issue raised in the application filed on 04.03.2020. Hence, the application should not have been admitted as per the first proviso to sub-section (2) of Section 98.

5. Alleged Suppression of Material Facts:
The appellate authority found that the appellant had willfully suppressed material facts by not disclosing the ongoing DGGI proceedings. This suppression rendered the advance ruling obtained from GAAR void ab initio under Section 104 of the CGST Act, 2017.

Conclusion:
The appellate authority declared the advance ruling by GAAR as void ab initio due to the appellant's suppression of material facts and the inadmissibility of the application under Section 98(2) of the CGST Act, 2017. Consequently, the classification of the product as "Un-fried Fryums" and the applicable GST rate of 18% stands, but the ruling itself is invalidated due to procedural impropriety.

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