Manpower Services Advance Ruling Blocked Due to Ongoing Tax Proceedings Under Section 98(2) CGST Act

Karnataka AAR rejected an advance ruling application for manpower services due to pending proceedings under Section 98(2) of CGST Act. The application was deemed inadmissible as the issues raised in the application were identical to those in an ongoing tax notice, precluding further examination of the exemption claim.

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Issues involved:
Admissibility of the application for advance ruling under Section 98(2) of the CGST Act, 2017.

Analysis:
The applicant, a Proprietary concern providing manpower services to government departments, sought an advance ruling on the exemption eligibility for supplying craftsman and other manpower services to a State Government organization, M/s. Karnataka Institute of Leather Technology. The applicant claimed exemption under Sl.No.72 of Notification No.12/2017-CT(R) dated 28-06-2017 for CGST. An audit report followed by a notice under Section 73 of KGST and CGST Act, 2017 was issued, questioning the claimed exemption. During the personal hearing, the applicant reiterated the facts presented in the application.

The Authority for Advance Rulings, Karnataka considered the provisions of the CGST Act, 2017 and the KGST Act, 2017 to be similar, differing only on specific provisions. The Authority reviewed the applicant's submission, the issues raised, and the relevant facts and arguments. The key issue was the admissibility of the application, governed by the first proviso to Section 98(2) of the CGST Act, 2017. This proviso states that the Authority shall not admit an application if the question raised is already pending or decided in any proceedings concerning the applicant under the Act.

Upon examination, it was found that the application, filed online, and the notice issued by the authorities both pertained to the applicability of GST on the supply of manpower services to M/s. Karnataka Institute of Leather Technology. As the issues raised in the application and the notice were the same, meeting the conditions of the proviso, the application was deemed inadmissible. Therefore, the Authority rejected the application as "inadmissible" in accordance with the first proviso to Section 98(2) of the CGST Act, 2017.

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