2022 (9) TMI 418 - HC - GST

Advance ruling application cannot be rejected merely because inquiry commenced after filing under Section 98 CGST Act

M/s. Srico Projects Pvt. Ltd., Versus Telangana State Authority For Advance Ruling

Telangana HC allowed petition challenging rejection of advance ruling application under Section 98 CGST Act, 2017. Court held that inquiry/investigation ... Scope of Advance Ruling application - Whether the 'Case' was pending before filing of application - Seeking a direction to respondent No.1 to consider its application for advance ruling under Section 98 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The Authority shall not admit an application for advance ruling where the question raised in the application is already pending or decided in any proceedings in the case of an applicant under any of the provisions of the CGST Act. Though the word “proceedings” has neither been defined in Chapter XVII nor in the definition clause i.e., in Section 2 of the CGST Act, if the said word is understood in the context in which it is being applied, namely, any proceedings pending or decided in the case of an applicant under the provisions of the CGST Act, it would mean proceedings where the question raised in the application for advance ruling has already been decided or is pending decision. Therefore, inquiry or investigation would not come within the ambit of the word “proceedings”. In so far the present case is concerned, there is no dispute to the fact that the petitioner had filed the application for advance ruling on 11.05.2019. From the order dated 03.06.2022, it is evident that notice was issued to the petitioner by DGGI on 15.12.2021 much after filing of the application for advance ruling. In our considered opinion, the same cannot be a bar under the first proviso to sub-section (2) of Section 98 of the CGST Act and the question of petitioner informing the Authority that it was being enquired into did not arise because the application was filed much prior in point of time. The respondent No.1 i.e., Telangana State Authority for Advance Ruling was not justified in rejecting the application of the petitioner vide the order dated 03.06.2022. Accordingly the said order dated 03.06.2022 is set aside and quashed. Petition allowed. Issues:Quashing of order by Telangana State Authority for Advance Ruling under CGST Act, Delay in providing advance ruling, Discrepancy in GST rates for works contract, Allegations of underpayment of GST, Rejection of application for advance ruling, Justification of rejection based on ongoing investigation by DGGI, Interpretation of 'proceedings' under CGST Act, Comparison with a previous ruling by Telangana State Authority for Advance Ruling, Decision on setting aside the order and directing reconsideration.Analysis:The petitioner, a private limited company engaged in works contract business, sought to quash an order by the Telangana State Authority for Advance Ruling under the CGST Act, alleging a delay in providing an advance ruling on GST rates for works contracts with the Central Government Employees Welfare Housing Organisation. The petitioner faced discrepancies in GST rates with the Organization resulting in alleged underpayment of GST, leading to an application for advance ruling. However, the Authority rejected the application citing an ongoing investigation by the DGGI into the petitioner's activities. The Authority's decision was based on the first proviso to Section 98(2) of the CGST Act, which prohibits admitting an application if the question raised is pending or decided in any proceedings under the Act.The Court analyzed the relevant sections of the CGST Act concerning advance rulings and the procedure to be followed. It emphasized that the term 'proceedings' in the Act refers to cases where the question raised in the application has already been decided or is pending a decision, excluding inquiries or investigations. In a similar case where an investigation was initiated post-application, the Authority had granted an advance ruling. Therefore, the Court concluded that the ongoing investigation by DGGI post the application did not justify the rejection of the petitioner's application for advance ruling.Based on this analysis, the Court set aside and quashed the order rejecting the petitioner's application. It directed the Telangana State Authority for Advance Ruling to reconsider the application filed by the petitioner and pass an appropriate order within two months from the date of the Court's order. The writ petition was allowed, and any pending miscellaneous applications were closed, with no order as to costs.