Advance ruling voided for concealing ongoing GST investigation proceedings and false declarations under Section 104

The AAAR dismissed an appeal challenging the voiding of an advance ruling. The appellant had applied for advance ruling regarding GST exemption on healthcare services while concealing ongoing investigation proceedings and GST DRC-01A notices issued by state tax authorities. The appellant falsely declared in their application that no proceedings were pending against them under GST provisions. The AAAR held that the appellant's misdeclaration and suppression of material facts regarding pending investigations constituted fraud, justifying invocation of Section 104 of CGST Act to declare the advance ruling void ab initio.

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Issues Involved:
1. Whether the medicines, consumables, and implants used in providing healthcare services to in-patients are considered a composite supply and eligible for exemption under "Health Care Services."
2. Whether the Advance Ruling No. GUJ/GAAR/R/31/2021 declaring the previous Advance Ruling No. GUJ/GAAR/R/11/2021 void ab-initio is legally correct.

Issue-wise Detailed Analysis:

1. Composite Supply and Exemption under Health Care Services:
- The appellant sought an advance ruling on whether the medicines, consumables, and implants used in the course of providing healthcare services to in-patients, including allied services (room rent, food, doctor fees, etc.), should be considered a "Composite Supply" and thus eligible for exemption under "Health Care Services."
- The Gujarat Authority for Advance Ruling (GAAR) initially ruled that these items are part of a "Composite Supply" and are exempt from CGST as per Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

2. Legality of Declaring Advance Ruling Void Ab-initio:
- Chronology of Events:
- Proceedings to access the business premises of the appellant were initiated on 04.06.2019, converted into search proceedings on 05.06.2019, and continued till 06.06.2019.
- On 11.02.2020, the appellant was issued three GST DRC-01A Part A forms by the Assistant Commissioner of State Tax, intimating the tax ascertained and advising payment.
- The appellant applied for an advance ruling on 02.12.2020, and GAAR pronounced the ruling on 20.01.2021.
- On 08.03.2021, GAAR received a letter from the Additional Commissioner of State Tax, informing them about the pending proceedings against the appellant before the advance ruling application was filed.
- GAAR issued a letter on 09.06.2021 for a personal hearing and declared the previous ruling void ab-initio on 19.07.2021.

- Appellant's Arguments:
- The appellant argued that there was no fraud, suppression, or misinterpretation of facts on their part.
- They contended that the term "proceedings" should only include steps that result in a decision, such as a show cause notice or order, and not mere inquiries or investigations.
- They relied on various judgments, including CIT-1 Vs Authority of Advance Ruling and Sage Publication Ltd Vs Deputy Commissioner of Income Tax, to support their contention that mere initiation of an investigation does not bar the jurisdiction of the Advance Ruling Authority.

- Findings and Legal Reasoning:
- The appellate authority noted that the appellant had indeed suppressed material facts by not disclosing the ongoing investigation and proceedings initiated by the State Tax authorities.
- The term "proceedings" was interpreted broadly to include investigation steps, as these are part of the process leading to a decision.
- The issuance of GST DRC-01A Part A forms was considered an intimation of liability and part of the proceedings.
- The appellant's reliance on previous judgments was found inapplicable as those cases involved different facts and contexts.
- The appellant's argument that the show cause notice is the starting point of any proceedings was rejected, as the concept of GST DRC-01A was introduced under GST law, which differs from the previous Central Excise Regime.
- The appellant's failure to declare the ongoing investigation was deemed suppression of facts, falling under the definition provided in Explanation 2 under Section 74 of the CGST Act, 2017.

Conclusion:
- The appellate authority upheld GAAR's decision to declare the previous advance ruling void ab-initio, concluding that the appellant had obtained the ruling by suppressing material facts. The appeal filed by the appellant was rejected, and the ruling dated 19.07.2021 was upheld.

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