2022 (4) TMI 1134 - AAR - GST

GST advance ruling application rejected for job work services in oil manufacturing due to pending investigations under Section 98(2) CGST Act 2017

In Re: M/s. Vaighai Agro Products Limited

AAR Tamil Nadu held that an advance ruling application regarding GST classification and rate for job work services in manufacturing coconut oil, coconut ... Maintainability of Advance Ruling application - Classification of supply of service - rate of GST - Job work service in relation to manufacture of Coconut Oil and Coconut De-oiled cake - Job work service in relation to manufacture of Rice Bran Oil and De-oiled Rice Bran - Taxable at 5% or otherwise? - applicability of Sl. No. 26 (1) and (g) of Notification No. 11/2017-CT(Rate) dated 28.06.2017 read with Notification No. 31/2017-CT (Rate) dated 13.10.2017 - HELD THAT:- It has been expressed by the Centre Jurisdictional authority that the State authorities have already made investigations regarding the taxability of the products for which Advance Ruling is sought. Section 98 of the CGST Act 2017 /TNGST Act 2017 provides the procedure to be followed on receipt of the application and the first proviso to Section 98(2) states that the application is not to be admitted when the question raised in the application is already pending or decided in any proceedings in the applicant's case. As per Section 98 (2) of the CGST Act, 2017, any application for advance ruling involving questions already pending or decided in any proceedings in the case of the applicant under any of the provisions of this Act shall not be admitted - In the applicant case, it is seen that the State authorities have already made investigations regarding the taxability of the products for which Advance Ruling is sought for and the questions raised by the applicant in their Advance Ruling application is one of the grounds raised in the Appeal filed by the Department against the order passed by the State Tax officer, Intelligence, O/o Deputy Commissioner (ST) Intelligence, Madurai seeking reassessment. In view of the specific embargo of Section 98(2) of the CGST Act, 2017, the Advance ruling application submitted by the applicant cannot be admitted by this Authority as the proceedings are pending on the issues on which the Advance Ruling is sought for - The application is not admitted under first proviso to Section 98 (2) of the CGST/TNGST Act 2017. Issues Involved:1. GST rate applicable for job work service in relation to the manufacture of Coconut Oil and Coconut De-oiled Cake.2. GST rate applicable for job work service in relation to the manufacture of Rice Bran Oil and De-oiled Rice Bran.Issue-wise Detailed Analysis:1. GST Rate for Job Work Service in Relation to Manufacture of Coconut Oil and Coconut De-oiled Cake:The applicant, M/s. Vaighai Agro Products Limited, sought clarification on whether the GST rate applicable for job work services related to the manufacture of Coconut Oil and Coconut De-oiled Cake is 5% (CGST-2.50%; SGST-2.50%) as per Sl. No. 26 (f) and (g) of Notification No. 11/2017-CT (Rate) dated 28.06.2017, read with Notification No. 31/2017-CT (Rate) dated 13.10.2017. The applicant argued that their activities qualify as job work under Section 2(68) of the CGST Act, as they process Copra Cake provided by Principal Manufacturers to extract Coconut Oil and De-oiled Coconut Cake. They contended that these activities should be classified under SAC Code 9988, which pertains to manufacturing services on physical inputs owned by others, and thus should attract a GST rate of 5%.2. GST Rate for Job Work Service in Relation to Manufacture of Rice Bran Oil and De-oiled Rice Bran:Similarly, the applicant sought clarification on whether the GST rate applicable for job work services related to the manufacture of Rice Bran Oil and De-oiled Rice Bran is 5% (CGST-2.50%; SGST-2.50%) as per Sl. No. 26 (f) and (g) of Notification No. 11/2017-CT (Rate) dated 28.06.2017, read with Notification No. 31/2017-CT (Rate) dated 13.10.2017. The applicant argued that their activities qualify as job work under Section 2(68) of the CGST Act, as they process Rice Bran provided by Principal Manufacturers to extract Rice Bran Oil and De-oiled Rice Bran. They contended that these activities should also be classified under SAC Code 9988, which pertains to manufacturing services on physical inputs owned by others, and thus should attract a GST rate of 5%.Authority's Findings and Decision:The Authority for Advance Ruling examined the facts of the case, including written and oral submissions, and the remarks from the Central and State Jurisdictional Authorities. It was noted that the applicant is engaged in job work activities, processing Copra Cake and Rice Bran to extract Coconut Oil, De-oiled Coconut Cake, Rice Bran Oil, and De-oiled Rice Bran.However, the Authority found that investigations regarding the taxability of the products for which Advance Ruling was sought were already pending with the State Investigation Authorities. Section 98 of the CGST Act 2017/TNGST Act 2017 stipulates that an application for advance ruling cannot be admitted if the question raised is already pending or decided in any proceedings under any provisions of the Act.The Authority verified documents and found that the applicant's place of business was inspected, and adjudication orders were issued for FY 2017-18, FY 2018-19, and FY 2019-20. Appeals were filed against these orders, and the grounds for appeal included issues related to the rate of tax and job work activities. Therefore, the issues raised by the applicant in the Advance Ruling application were already part of the grounds for appeal and required reassessment.Ruling:The application for Advance Ruling was not admitted under the first proviso to Section 98(2) of the CGST/TNGST Act 2017, as the issues were already pending in proceedings before the State Investigation Authorities.