Person liable for reverse charge tax can seek advance ruling under Section 95 CGST Act

The Rajasthan HC allowed a petition challenging rejection of an advance ruling application under CGST Act. The petitioner, liable to pay tax on reverse charge basis despite being a recipient of goods/services, was denied advance ruling by the Authority for Advance Ruling (AAR). The HC held that persons liable for reverse charge tax fall within the definition of "taxable person" and can seek advance ruling under Section 95. The court emphasized that Section 9(3) creates a legal fiction treating recipients as persons liable to pay tax, bringing them within the ambit of advance ruling provisions. The matter was remanded to AAR for fresh consideration under Section 98(4) after setting aside the rejection order.

---

---

Issues involved:
1. Whether a recipient liable to pay tax on reverse charge basis can seek Advance RulingRs.

Analysis:
The petitioner filed a petition seeking to quash an order by the Rajasthan Authority for Advance Ruling (AAR) under the Goods & Services Tax Act, 2017. The petitioner, engaged in the transmission of electricity, sought clarification on the exemption of transportation of goods under a specific notification. The AAR held that the application for advance ruling was not maintainable as the petitioner was not the supplier. The petitioner argued that there is no restriction in Sections 95 and 97 that the application can only be made by the supplier. The respondent contended that the petitioner was not covered under the definition of a supplier.

The key issue revolved around whether a recipient liable to pay tax on reverse charge basis can seek an Advance Ruling. The interpretation of relevant sections of the CGST Act was crucial. Section 97(1) allows any applicant to seek an advance ruling, and Section 97(2) specifies the issues for which a ruling can be sought, including the applicability of notifications. The definition of 'reverse charge,' 'supplier,' and 'taxable person' under Sections 2(98), 2(105), and 2(107) respectively was also significant.

The court analyzed the definitions and provisions of the CGST Act, emphasizing that a person liable to pay tax on reverse charge basis falls under the definition of a taxable person. The court noted that the AAR's interpretation of the definition of 'Advance Ruling' was flawed and highlighted the Supreme Court's stance on statutory definitions being subject to context. The court also considered the deeming fiction under Section 9(3) of the CGST Act, which treats recipients liable to pay tax on reverse charge as the person liable to pay tax.

Regarding the objection of alternative remedy, the court clarified that appeals against Advance Rulings are provided under Section 100, but no appeal is allowed against the rejection of an application under Section 98(2). As the petitioner's application was rejected under Section 98(2), the court set aside the impugned order and remitted the matter back to the AAR for reconsideration under Section 98(4) of the CGST Act. Ultimately, the writ petition was allowed, granting relief to the petitioner.

---