Service recipient cannot seek advance ruling on GST exemption for services received from provider

The AAAR Gujarat held that an advance ruling application by a service recipient was non-maintainable under Section 98(2) of CGST/GGST Act, 2017. The appellant sought ruling on GST exemption for design and consultancy services to be received from a service provider. The AAAR determined that advance ruling provisions apply only to supplies undertaken by the applicant, not services received by them. Since the ruling would only bind the recipient and not the service provider, it would lack practical relevance and applicability, defeating the provision's purpose.

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Issues involved:
1. Maintainability of the appeal under Section 98(2) of the CGST/GGST Act, 2017.
2. Interpretation of the term "applicant" under Section 95(c) of the CGST Act, 2017.
3. Determination of liability to pay tax on services provided by M/s INI Studio.
4. Application of exemption under Entry No. 3 of Notification No. 12/2017-CT to services provided to a municipality under Article 243W of the Constitution.

Analysis:
1. The main issue was the maintainability of the appeal under Section 98(2) of the CGST/GGST Act, 2017. The Appellate Authority for Advance Ruling observed that the appellant sought a ruling on inward supply, but the ruling was on the liability to pay tax on services supplied to them, not on the supplies made by them. The ruling was binding only on the applicant, and the supplier was not bound by it. The appellant's interpretation of the term "applicant" under Section 95(c) was deemed incorrect, leading to the rejection of the appeal as non-maintainable.

2. The interpretation of the term "applicant" under Section 95(c) of the CGST Act, 2017 was crucial. The appellant argued that as a registered entity seeking a ruling on inward supply, they were eligible to apply. However, the Appellate Authority clarified that the applicant should be a person registered or desirous of obtaining registration under the Act. The ruling was specific to the recipient of the supply, and the supplier was not bound by it, emphasizing the importance of correct interpretation of legal provisions.

3. The determination of liability to pay tax on services provided by M/s INI Studio was a key aspect. The appellant contended that the services received were exempt under Entry No. 3 of Notification No. 12/2017-CT as "Pure Services" in relation to functions entrusted to a municipality under Article 243W of the Constitution. However, the Appellate Authority rejected the appeal on grounds of non-maintainability, focusing on the nature of the ruling sought and the applicability of the exemption.

4. The application of exemption under Entry No. 3 of Notification No. 12/2017-CT to services provided to a municipality under Article 243W of the Constitution was a significant issue. The appellant argued that the services for a state-of-the-art office building were in relation to duties under the GPMC Act and Article 243W, thus qualifying for exemption. The appellant emphasized the broad interpretation of "in relation to" and cited relevant case laws to support their position. However, the appeal was rejected based on the maintainability issue, and the original ruling by the Gujarat Authority for Advance Ruling was upheld.

In conclusion, the judgment focused on the correct interpretation of legal provisions, the scope of rulings by the Advance Ruling Authority, and the specific nature of the appeal in relation to liability for tax on services provided. The rejection of the appeal was primarily based on the non-maintainability under the CGST Act, emphasizing the importance of clarity and adherence to statutory requirements in seeking advance rulings.

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