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

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 that questions regarding zero-rated supply classification, refund entitlement on inputs, penalty liability for misuse by recipient, documentation requirements, and reverse charge mechanism liability were not covered under Section 97(2) of CGST Act, 2017. The Authority ruled that advance ruling can only be sought for supplies undertaken or proposed by the applicant, making the reverse charge mechanism question inadmissible.

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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.

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