AAR rejects advance ruling on ITC transfer and GSTIN merger citing lack of jurisdiction under Section 97(2)

AAR Gujarat rejected an advance ruling application regarding transfer of ITC closing balance and merger of GSTIN registrations. The Authority held that the application was non-maintainable as it fell outside the statutory jurisdiction defined under Section 97(2) of CGST Act. Following JSW Energy Limited v. Union of India, the AAR determined it cannot rule on matters beyond its carved-out functional jurisdiction, distinguishing between CGST Rules and Notifications under Section 97(2)(b). The application was rejected for lack of maintainability.

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Issues Involved:
1. Whether the applicant can transfer the closing balance of ITC from its GSTIN (24AAACT6305N2Z9) to the existing GSTIN (24AAACT6305N1ZA) of JKPL CPM by filing Form ITC-02 due to the merger of two GSTINs.
2. Whether any additional liability towards payment of Tax or reversal of ITC will arise on the Applicant on account of the merger of its GSTIN with the GSTIN of the existing unit of JKPL CPM and the filing of Form ITC-02.

Issue-wise Detailed Analysis:

I. Maintainability of Application under Section 97(2)(b) CGST Act:
- The applicant, JK-New Unit, sought to transfer the closing balance of ITC from GSTIN 24AAACT6305N2Z9 to GSTIN 24AAACT6305N1ZA by filing Form ITC-02 due to the merger of the two GSTINs.
- The Authority examined whether the application is maintainable under Section 97(2)(b) of the CGST Act, which pertains to the applicability of a notification issued under the provisions of the Act.
- The Authority referred to Section 95(a) of the CGST Act, which defines 'Advance Ruling' as a decision on matters/questions specified in Section 97(2) in relation to the supply of goods/services.
- Section 97(2)(b) specifies that the question must be in respect of the applicability of a notification issued under the Act.
- The Authority clarified that the term 'Notification' in Section 97(2)(b) refers to notifications issued by the Government in relation to the supply of goods/services, such as notifications for the effective rate of tax and exemptions.
- The Authority rejected the applicant's submission to consider CGST Rules as notifications under Section 97(2)(b), stating it would be improper and contrary to statutory provisions.
- The Authority emphasized its duty to pass rulings within the confines of the statute and not to overreach its functional jurisdiction defined in Section 97(2).

II. Applicability of Section 18(3) and Rule 41 of CGST Act and Rules:
- The applicant argued that the merger and transfer of ITC are covered under Section 18(3) of the CGST Act and Rule 41 of the CGST Rules.
- Section 18(3) allows the transfer of unutilized ITC in the event of a sale, merger, demerger, amalgamation, lease, or transfer of business.
- Rule 41 outlines the procedure for transferring unutilized ITC, requiring the submission of Form GST ITC-02 and a certificate from a practicing CA or cost accountant.
- The Revenue submitted that the transfer of ITC can be allowed subject to fulfilling the conditions prescribed under Section 18(3) and Rule 41.
- The Authority noted that the applicant's reliance on an Andhra Pradesh Advance Ruling in the case of M/s. Shilpa Medicare Limited was not applicable as it was set aside by the Andhra Pradesh Appellate Authority for Advance Ruling.

III. Additional Liability Towards Payment of Tax or Reversal of ITC:
- The applicant raised a second question regarding any additional liability towards payment of tax or reversal of ITC due to the merger and filing of Form ITC-02.
- The Authority did not address this question directly but emphasized that the application was non-maintainable under Section 97(2)(b) CGST Act.

Ruling:
- The Authority held that the application was non-maintainable and rejected it, emphasizing that it must operate within the statutory and functional jurisdiction defined by the CGST Act. The Authority cannot replace the term 'Notification' with 'CGST Rules' as suggested by the applicant.

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