2022 (12) TMI 256 - AAR - GST

Advance Ruling Denied for Completed Services Under CGST Act Section 95(a), Highlighting Proactive Ruling Requirement for Ongoing Transactions

AAR Karnataka examined an advance ruling application for completed services. The Authority determined that Section 95(a) of CGST Act 2017 allows rulings ... Advance ruling - maintainability of advance ruling application - being undertaken - ongoing and continuous supply - rejection under Section 98(2) of the CGST Act, 2017Advance ruling - being undertaken - ongoing and continuous supply - maintainability of advance ruling application - The application for advance ruling was not maintainable as it related to completed supplies rather than supplies 'being undertaken' or proposed to be undertaken. - HELD THAT: - The Authority examined the scope of 'advance ruling' as defined in Section 95 read with Section 97(2) and focused on the phrase 'being undertaken'. It held that 'being' as a present participle denotes a present and continuing action and therefore the phrase 'being undertaken' contemplates an ongoing or proposed transaction rather than a completed one. The GST guidance (Flyer) was noted to confirm that advance rulings are confined to proposed transactions or transactions which are ongoing. Since the applicant's O&M services had been completed prior to filing the application, the questions related to a past and completed supply and so fell outside the jurisdiction of the Authority to determine by advance ruling. [Paras 9, 10, 11, 12]Application held not maintainable and beyond the Authority's jurisdiction because it concerned completed supplies rather than supplies 'being undertaken'.Rejection under Section 98(2) of the CGST Act, 2017 - The Authority rejected the application under the operative power of Section 98(2) of the CGST Act, 2017. - HELD THAT: - Having concluded that the matter did not fall within the scope of advance ruling jurisdiction, the Authority exercised its power under Section 98(2) to reject the application. The rejection follows the finding that the advance ruling mechanism cannot be invoked for past/completed supplies. [Paras 13]Application rejected under Section 98(2) of the CGST Act, 2017.Final Conclusion: The Authority dismissed the application for advance ruling as not maintainable because it concerned completed O&M services, and accordingly rejected the application under Section 98(2) of the CGST Act, 2017. Issues:- Jurisdiction of the Advance Ruling Authority to consider a completed supply for advance ruling.Analysis:The case involved an application for advance ruling by M/s. KBL SPML Joint Venture regarding the classification of services provided to a local authority under Notification No.12/2017-Central Tax (Rate). The applicant sought clarification on whether their transaction fell under the mentioned notification. The Authority for Advance Rulings, Karnataka, examined the maintainability of the application as the services in question had already been completed. The Authority noted that Section 95(a) of the CGST Act 2017 allows seeking advance ruling on ongoing or proposed transactions. The term 'being undertaken' implies a present and continuous supply. The Authority emphasized that the questions raised in the application pertained to a completed supply, not an ongoing one, rendering the application beyond its jurisdiction.The Authority highlighted the broad scope of Advance Ruling under the CGST Act 2017, which can cover proposed as well as ongoing transactions. However, in this case, the services in question had already been provided, and the application was filed post-completion. As per the findings, the Authority ruled that the application was not within its jurisdiction and, therefore, rejected the application under Section 98(2) of the CGST Act 2017. The decision was based on the principle that advance rulings are intended for ongoing or proposed transactions, not completed supplies. The ruling emphasized the importance of seeking advance rulings at the appropriate stage of a transaction to ensure the jurisdictional validity of the application.