AAR dismisses application for advance ruling on pneumatic conveying system components sold through high sea sales

The AAR dismissed an application seeking advance ruling on classification and place of supply for pneumatic conveying system components sold on high sea sales basis. The Authority held that high sea sales taxability depends on place of supply determination, which falls outside Section 97(2) of CGST Act 2017. Since place of supply matters are beyond AAR's purview under Section 97, the application was disposed of as not maintainable, with the questions raised falling outside the Authority's mandate.

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Issues involved:
1. Whether supply of components of Pneumatic Conveying system on High Sea Sales basis constitutes supply of goods or services as per Schedule III of CGST Act.

Analysis:
1. The applicant, engaged in design and supply of Pneumatic Conveying Systems (PCS), sought an advance ruling on the tax treatment of supplying components on High Sea Sales basis.
2. The applicant argued that the sale of imported components on High Sea Sales basis falls under Entry 8(b) of Schedule III of the CGST Act and is not considered a supply of goods or services under GST.
3. The Jurisdictional GST Officer supported the applicant's view, stating that High Sea Sales transactions are covered by Entry 8(b) of Schedule III, subject to the payment of import duties and IGST by the Indian customers.
4. The Authority for Advance Ruling clarified that questions falling under Section 97(2) of the CGST Act are eligible for advance ruling, and the issue of High Sea Sales does not fall within the purview of the Authority.
5. The ruling highlighted that the determination of import and High Sea Sales falls under Customs domain, governed by the Customs Tariff Act, 1975, and the decision of the GST council regarding the levy of IGST on High Sea Sales of imported goods.
6. Consequently, the Authority concluded that the application does not fall within the scope of Section 97 of the CGST Act and is not covered by the Authority for Advance Ruling, thereby disposing of the application.

This detailed analysis of the legal judgment provides a comprehensive understanding of the issues involved, the arguments presented by the applicant, the views of the Jurisdictional GST Officer, and the final ruling by the Authority for Advance Ruling, emphasizing the legal framework and provisions governing High Sea Sales transactions under the GST regime.

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