AAAR rejects advance ruling appeal for incomplete fee payment under Section 49 GST requirements

The AAAR Haryana rejected the appellant's advance ruling application for being incomplete due to insufficient fee payment. The appellant was required to deposit Rs. 20,000 (Rs. 10,000 CGST and Rs. 10,000 HGST) as mandatory statutory fee for filing appeal against the Authority for Advance Ruling order. However, the appellant only paid Rs. 10,000 (Rs. 5,000 CGST and Rs. 5,000 HGST) as tax instead of the required fee under Section 49. The AAAR held that since the statutory precondition for fee payment was not fulfilled, the appeal regarding classification of licensing services under franchise agreement was not admitted and deserved rejection for non-compliance with GST law requirements.

---

---

Issues Involved:
1. Classification of services under GST
2. Applicability of GST rates
3. Procedural adherence in appeal filing
4. Validity of AAR's decision-making process

Summary of Judgment:

1. Classification of Services under GST:
The primary issue was whether the licensing services provided by the Appellant under the Franchise Agreement, for which a periodic royalty is charged, are correctly classifiable under:
- Service Code 997336 (licensing services for the right to use trademarks and franchises) or
- Service Code 997339 (licensing services for the right to use other intellectual property products),
- Or under Service Code 998396 (trademarks and franchises).

The Appellate Authority ruled that the services fall under Chapter Heading 9983 as Other Professional, Technical, and Business Services and service code (Tariff)-998396 Trademarks and franchises, attracting GST @ 18%.

2. Applicability of GST Rates:
The Appellant argued that the services should be classified under Service Code 997336 or 997339, attracting a GST rate of 12%. The AAR, however, ruled that the services are classifiable under Service Code 998396, attracting a GST rate of 18%.

3. Procedural Adherence in Appeal Filing:
The Appellate Authority noted that the pre-requisite of payment of fee for filing the appeal as per Section 100 (3) read with Rule 106 (1) of CGST Act, 2017 was not fulfilled. The Appellant paid only Rs. 10,000/- instead of the required Rs. 20,000/- (Rs. 10,000/- CGST and Rs. 10,000/- HGST).

4. Validity of AAR's Decision-Making Process:
The Appellant contended that the AAR's ruling was a non-speaking order, passed without adequate reasons and without considering their submissions. They argued that the ruling violated the principles of natural justice. The Appellate Authority acknowledged these contentions but did not address them substantively due to the procedural lapse in fee payment.

Order:
The appeal was not admitted due to the incomplete deposition of the requisite fee as mandated under the GST law. The appeal filed by M/s. Subway Systems India Private Limited (Now Eversub India Pvt. Ltd.) was disposed of on these grounds.

---