2024 (3) TMI 739 - AAAR - GST

Medical Council wins appeal after advance ruling rejection violated natural justice principles

In Re: M/s. Tamilnadu Medical Council

The AAAR, Tamil Nadu set aside the rejection of an advance ruling application by the Tamil Nadu Medical Council regarding GST levy on various fees. The ... Violation of principles of natural justice - failure to share documents and comments forwarded by DGGI, with the appellants - Rejection of application for Advance Ruling - Levy of GST - various fees collected by Tamil Nadu Medical Council, a Government Authority - HELD THAT:- The rejection of application for advance ruling in the instant case stems from the fact that an investigation initiated by DGGI against the appellant is pending on the same issue. This being the case, the advance ruling authority ought to have shared the new findings of DGGI that was lying before them, and discussed the same in detail, either during the personal hearing, or thereafter, before proceeding to finalise the case. The principles of natural justice have not been followed in the instant case since the advance ruling authority had erred in not sharing the documents and comments forwarded by DGGI, with the appellants - the ends of justice will be met by restoring the application for advance ruling to its original position, by way of remanding the case to the lower authority, with a direction to forward the letter dated 03.04.2023 of DGGI alongwith its enclosures, if any, to the appellant enabling them to comment on the same, and to offer them another opportunity of personal hearing before deciding the case as per the provisions of law. The matter is remanded to the Lower Authority for consideration and passing of appropriate orders, after following the principles of natural justice. Issues Involved:1. Whether the issuance of summons under Section 70 of the CGST Act constitutes 'proceedings' impacting the admissibility of an advance ruling application.2. Whether the principles of natural justice were followed in the rejection of the advance ruling application.Issue-wise Detailed Analysis:1. Issuance of Summons as 'Proceedings':The primary issue revolves around whether the issuance of summons under Section 70 of the CGST Act can be classified as 'proceedings,' thereby affecting the admissibility of the advance ruling application filed by the appellant. The Appellant, Tamil Nadu Medical Council, argued that the investigation by the DGGI-South, Sub-National unit, Chennai, unless converted into a Show Cause Notice (SCN), should not be construed as proceedings. They relied on various judicial precedents, including rulings by the Supreme Court and High Courts, which distinguish between 'proceedings' and 'investigations.' The appellant cited the case of M/s. Shalby Limited, where it was held that Section 98(2) is attracted only when a show cause notice is issued, and mere inquiries or investigations do not fall within the ambit of 'proceedings.'The original Advance Ruling Authority rejected the application under Section 98(2) of the CGST Act, citing that the summons issued under Section 70 is a proceeding. The authority relied on the interpretation that any pending investigation constitutes a proceeding, thereby rejecting the application.2. Principles of Natural Justice:The appellant contended that the principles of natural justice were not adhered to, as they were not informed of the additional material submitted by the DGGI Office to the Advance Ruling Authority. The appellant argued that they were not given an opportunity to comment on submissions related to the Andhra Pradesh High Court order, which was used in the decision-making process. They referenced a prior ruling by the Tamil Nadu State Appellate Authority for Advance Ruling in a similar case, where the case was recommended to be reconsidered by the lower authority with an opportunity for the appellant to be heard.The Appellate Authority found merit in the appellant's claim regarding the lack of adherence to the principles of natural justice. It was observed that the rejection of the application was based on the fact that an investigation by DGGI was pending, and the authority should have shared the findings with the appellant. The authority concluded that the principles of natural justice were not followed, as the appellant was not provided with the documents and comments from the DGGI, nor given a chance to respond.Conclusion:The Appellate Authority set aside the original order of the Advance Ruling Authority, remanding the matter back for reconsideration. It directed the lower authority to forward the letter dated 03.04.2023 from DGGI, along with any enclosures, to the appellant, allowing them to comment and participate in a personal hearing before a final decision is made. This decision emphasizes the importance of following the principles of natural justice and ensuring that all relevant materials are shared with the parties involved in advance ruling proceedings.