2021 (12) TMI 145 - AAR - GST

Ruling: Applicability of Reverse Charge Tax Issue Falls Outside Jurisdiction

In Re: M/s. Bhopal Dugdh Sangh Sahakari Maryadit Bhopal Dairy Plant, Habibganj,

The Advance Ruling Authority determined that the application regarding liability to pay tax under reverse charge, despite tax already paid under forward ... Scope of Advance Ruling application - Liability of tax - liability to pay tax under RCM - Will the tax paid by service provider under forward charge absolve the recipient from payment of tax? - applicability of N/N. 29/2018 dated. 31.12.2018 - Principles of revenue neutrality - HELD THAT:- The principle of revenue Neutrality is applicable in the case since there has been no loss to the Government and also it is just a procedural flaw causing no impact to the Treasury. The only assertion is whether the existence of such a liability creates irregularities in respect of tax laws outside the limited applicability of the GST Acts. In other words, the existence of such a liability is not being challenged by the applicant in the current application, rather this is an appeal to merit about the relevance or logic of levying the tax after the same has already been paid by the supplier. In other words, the applicant himself admits that the liability to pay tax exists, and is saying that the liability 'should not' exist since it is against the fundamental principles established by various Hon'ble Courts based on their interpretations of the various statutes. Therefore, the question proposed before the Advance Ruling Authority is not whether the liability exists or not, but whether such a liability is valid/sustainable or not. That is not within the purview of Advance Ruling Authority to decide. This Authority is of the view that based within the meaning of Section 97 of the GST Acts, an application for Advance Ruling can only be made to determine the “liability to pay tax” on any goods or services or both. The Applicant himself accepts that the liability as per the notification comes under RCM. but the Tax has been paid on forward charge. The main stress is on the point of double taxation. Therefore, no application can be made to determine whether the liability is justified / valid or not or whether it shall amount to double taxation or not. The current application is not covered within the scope of Section 97 of the CGST Act and thus, the Advance Ruling Authority cannot comment upon the question put forth before them under the said provisions. The application is therefore disposed of as such. Issues:- Determination of liability to pay tax under reverse charge mechanism when the supplier has already paid tax under forward charge.Analysis:1. Background and Facts: The applicant, a dairy plant company, sought an advance ruling on the liability of the recipient to pay tax under reverse charge when the supplier has already paid tax under forward charge.2. Question Raised: The main issue raised was whether the tax paid by the service provider under forward charge would absolve the recipient from the payment of tax under reverse charge.3. Department's View: The jurisdictional officer opined that if the liability to pay tax under reverse charge is specified in a notification, payment should be made accordingly. The officer also highlighted that the question raised did not come under the purview of a specific section of the GST Act.4. Applicant's Submissions: The applicant argued that due to a procedural flaw, tax was paid under forward charge instead of reverse charge, leading to a discrepancy. They emphasized the principle of revenue neutrality and cited legal precedents to support their stance against double taxation.5. Discussion and Findings: The Authority examined the legal basis for the question raised. It was noted that the application fell under the category of determining the liability to pay tax. However, the Authority highlighted that the question was not about the existence of the liability but rather its validity, which is beyond the Authority's scope.6. Conclusion: The Authority concluded that the application did not fall within the scope of Section 97 of the CGST Act. Therefore, the Advance Ruling Authority could not provide a ruling on the question raised. The ruling was disposed of accordingly, subject to the provisions of the GST Act.7. Ruling: The ruling stated that the application was not covered under Section 97 of the CGST Act, and hence, the Authority could not comment on the question. The ruling was deemed valid unless declared void under specific provisions of the GST Act.