2023 (12) TMI 888 - AAR - GST

AAR rejects advance ruling application on compensation cess credit due to pending DGGI investigation under Section 98(2)

The AAR Odisha rejected an advance ruling application filed by the applicant regarding availability of compensation cess credit on coal purchases. The ... Scope of Advance Ruling application - Investigation proceedings already initiated - Compensation Cess paid by the Applicant on purchase of Coal which remained as unutilized ITC in the electronic credit ledger - whether credit will be available to the Applicant or the Applicant is required to reverse the same? - HELD THAT:- As per the information available to this forum, we see that DGGI, Rourkela Regional Unit under letter Ref No. DGGI/INV/GST/2873/2021-Gr-A/1698 dated 15.12.2021 & DGGI/ENV/GST/2873/2023-Gr A/212 dated 02.03.2023 has informed that an investigation has been initiated against M/s. National Aluminium Company Ltd. for excess/irregular availment of Compensation Cess which is in advance stage of culmination and a Demand Cum Show Cause Notice is on the verge of issuance. In this regard, it would be pertinent to mention here that the proviso to sub-Section (2) of Section 98 of the CGST Act, 2017 provides that 'the Authority shall not admit the application 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 this Act'. The application for advance ruling filed by the Applicant is not maintainable under law and liable for rejection. Hence, the said application is rejected in terms of Section 98(2) of the CGST Act, 2017 read with Section 97(2) of the said Act. Issues:The judgment involves a question regarding the availability of Compensation Cess paid by the Applicant on the purchase of Coal as unutilized Input Tax Credit (ITC) in the electronic credit ledger.Summary:Issue 1: Compensation Cess on Purchase of CoalThe Applicant, engaged in the manufacture and supply of Aluminum Metal and Alumina, sought an advance ruling on whether the Compensation Cess paid on the purchase of Coal, which remained as unutilized ITC, continues to be available or if the Applicant is required to reverse the same. The Applicant highlighted the provisions of the GST (Compensation to States) Act, 2017, regarding the levy of Compensation Cess on specified supplies and the utilization of input tax credit. However, the Authority for Advance Ruling, Odisha, found that the question raised did not fall under the prescribed categories for advance ruling as per Section 97(2) of the CGST Act, 2017. Additionally, discrepancies in the information provided by the Applicant led to the rejection of the application under the Proviso to Section 98(2) of the CGST Act.Conclusion:The application for advance ruling was deemed not maintainable under the law and was rejected, citing the provisions of Section 98(2) of the CGST Act, 2017. The Applicant or the jurisdictional officer was given the option to appeal to the Odisha State Appellate Authority for advance ruling within 30 days from the date of receipt of the ruling.