2022 (2) TMI 831 - AAR - GST

AAR dismisses application on iron steel supply to SEZ unit under Section 97(2) CGST Act 2017

In Re: M/s. Shashi Metals Private Ltd.

The AAR, UP dismissed the application seeking advance ruling on supply of iron and steel to SEZ unit for manufacturing approved items. The Authority held ... Classification of supply - supply of Iron and Steel (HSN Code: Chapter 72) to M/s Dewan India, Moradabad for manufacturing as raw material of its items approved by the Government of India, Ministry of Commerce and Industry Department of Commerce, Moradabad Special Economic Zone, Moradabad - Zero Rated Supply or not - refund on Inputs, if supplies are made without payment of tax against Letter of Undertaking - levy of penalty or tax if supplies made by him to M/s Dewan India, Moradabad are consumed used by recipient for any purpose other those mentioned in its LOA (i.e approved purpose) - documents required to be maintained by the applicant - liability on Applicant Company under Reverse Charge Mechanism (RCM). Whether supply of Iron and Steel to M/s Dewan India, Moradabad for manufacturing of its items approved by the Government of India, Ministry of Commerce and Industry Department of Commerce, Moradabad Special Economic Zone, Moradabad will fall under supply for approved purpose? - HELD THAT:- The said question (i.e. whether any supply will be covered in supply to SEZ unit for approved purpose) is not covered in any category under Section 97(2) of the CGST Act, 2017. Whether supply of Applicant will be treated as Zero Rated Supply? - HELD THAT:- The said question is also not covered in any category under Section 97(2) of the CGST Act, 2017. Whether the applicant is entitled to claim refund on Inputs, if supplies are made without payment of tax against Letter of Undertaking? - HELD THAT:- The said question is also not covered in any category under Section 97(2) of the CGST Act, 2017. Whether the applicant can be held liable for any penalty or tax if supplies made by him to M/s Dewan India, Moradabad are consumed used by recipient for any purpose other those mentioned in its LOA? - HELD THAT:- The said question is also not covered in any category under Section 97(2) of the CGST Act, 2017. Documents required to be maintained by the applicant - HELD THAT:- The said question is also not covered in any category under Section 97(2) of the CGST Act, 2017. Whether there is any liability on Applicant Company under Reverse Charge Mechanism? - HELD THAT:- From the definition of advance ruling, it is evident that an applicant can seek an Advance Ruling only in relation to supply of goods or services or both undertaken or proposed to be undertaken by them. Accordingly, the question on tax liability under reverse charge mechanism is not liable for admission before the authority of advance ruling. Issues Involved:1. Whether the supply of Iron and Steel to M/s Dewan India falls under supply for approved purpose.2. Whether the supply will be treated as 'Zero Rated Supply' under Section 16(1) of the IGST Act, 2017.3. Entitlement to claim refund on inputs if supplies are made without payment of tax against Letter of Undertaking.4. Liability for penalty or tax if supplies are used for purposes other than those mentioned in the LOA.5. Documents required to be maintained by the applicant.6. Liability under Reverse Charge Mechanism (RCM).Issue-wise Detailed Analysis:1. Supply for Approved Purpose:The applicant sought to determine if the supply of Iron and Steel to M/s Dewan India, an SEZ unit, for manufacturing approved items would fall under supply for the approved purpose. The authority found that this question does not fall under any category specified in Section 97(2) of the CGST Act, 2017, which lists the matters on which advance ruling can be sought. Therefore, this issue was not addressed.2. Zero Rated Supply:The applicant queried whether their supply would be considered a 'Zero Rated Supply' as per Section 16(1) of the IGST Act, 2017. The authority concluded that this question also does not fall under any category specified in Section 97(2) of the CGST Act, 2017. Consequently, this issue was not addressed.3. Refund on Inputs:The applicant asked if they are entitled to claim a refund on inputs when supplies are made without payment of tax against a Letter of Undertaking. The authority found that this question is not covered under any category specified in Section 97(2) of the CGST Act, 2017. Thus, this issue was not addressed.4. Liability for Penalty or Tax:The applicant sought to know if they would be liable for any penalty or tax if the supplies made to M/s Dewan India are used for purposes other than those mentioned in the LOA. The authority determined that this question is not covered under any category specified in Section 97(2) of the CGST Act, 2017. Therefore, this issue was not addressed.5. Documents Required to be Maintained:The applicant inquired about the documents required to be maintained. The authority found that this question does not fall under any category specified in Section 97(2) of the CGST Act, 2017. Hence, this issue was not addressed.6. Liability under Reverse Charge Mechanism (RCM):The applicant asked if there is any liability under the Reverse Charge Mechanism. The authority noted that the definition of 'advance ruling' under Section 95(a) of the CGST Act limits the scope to matters related to the supply of goods or services undertaken or proposed to be undertaken by the applicant. Therefore, questions on tax liability under RCM are not admissible for advance ruling. This issue was not addressed.Conclusion:The authority concluded that none of the questions raised by the applicant fall within the scope of Section 97 of the CGST Act, 2017. Therefore, the application was disposed of, as it was not covered under the ambit of the Authority for Advance Ruling. The ruling is valid only within the jurisdiction of the Authority for Advance Ruling Uttar Pradesh and subject to the provisions under Section 103(2) of the CGST Act, 2017, until declared void under Section 104(1) of the Act.