2024 (10) TMI 434 - AAR - GST

Tamil Nadu Medical Council's advance ruling application rejected as DGGI investigation proceedings preceded the GST ruling request

In Re: M/s. Tamil Nadu Medical Council.

AAR Tamil Nadu rejected an advance ruling application filed by Tamil Nadu Medical Council regarding GST levy on various fees collected. The authority held ... Admissibility of the Advance Ruling application in view of the investigation initiated by DGGI - Definition and scope of 'proceedings' under the CGST Act, 2017 - scope of 'proceedings' under the CGST Act, 2017 - Levy of GST on various fees collected by Tamil Nadu Medical Council, a Government Authority - HELD THAT:- Since the first proviso to Section 98 (2) restricts admitting application seeking advance ruling on questions which are already pending in any proceedings in the case of an applicant under any of the provisions of the Act, the term ‘proceedings’ assumes immense significance in the context of the instant case. More so, because the applicant opines that the inquiry or investigation initiated by DGGI, would not fall within the ambit of the word ‘proceedings’ impacting the admissibility of the original application for advance ruling filed by the appellant - It is quite clear that the term ‘proceedings’ has not been defined under the CGST Act, 2017. However, the word ‘proceedings’ is seen to have been widely used in the Act, ibid, either as it is, in the context of the situation, or with a prefix bringing out the meaning and purpose in an unambiguous manner like Recovery proceedings’, ‘Assessment proceedings’, etc. The term ‘proceedings’ used in the CGST Act, 2017 is not restricted to proceedings which commence after the issue of show cause notice alone, and that the same also denotes proceedings prior to the issue of show cause notice, or proceedings which may not culminate in the issue of any show cause notice at all. Accordingly, the notion of the applicant that the process relating to commencement of inquiry/investigation under summon procedure do not get covered the category of the term ‘proceedings’, under the CGST Act, 2017, is misconceived and misplaced, for the reason that apart from such judicial proceedings’, even the other relating to assessment, audit, detention/ seizure/ release of goods and conveyance which may or may not entail any issue of show cause notice, are also treated as ‘proceedings’ under the CGST Act, 2017. Investigation is activated when there is enough predication to show that there is an alleged tax evasion and the essence of investigation is to carry out an in-depth review of the taxpayer’s records and activities to ensure that the tax due to the Government is not lost in evasion. Therefore, the commencement of investigation or inquiry is to be seen as the start of a proceeding to safeguard Government revenue. It is opined that an advance ruling is not required to be pronounced once an investigation is initiated against the applicant under the provisions of the CGST Act, or the GST Act of the respective State or Union Territory, involving the same issue on which the query for advance ruling has been raised. Further, it is seen that while the application for advance ruling in the instant case was filed by the applicant online on 30.12.2022, the first summon issued by the Senior Intelligence Officer, DGGI, Chennai Zonal Unit is dated 30.11.2022 for appearance on 07.12.2022. It is seen that the date of issue of the second summon is 20.12.2022 for appearance on 09.01.2023. It is quite clear from the above, that the initiation of proceedings by way of issue of both the summons that seeks the details/documents in relation to the issue involved in the instant case, precedes the date of filing of advance ruling application by the applicant. More specifically, the letter dated 19.12.2022 of the applicant furnishing the details of fees collected, unambiguously proves the case in point. The application for advance ruling filed online dated 30.12.2022 by the applicant is liable for rejection under the first proviso to Section 98 (2) of the CGST / TNGST Acts, 2017, in view of the fact that ‘proceedings’ on the same issue was already pending against the applicant. The advance ruling application is rejected. Issues Involved:1. Applicability of GST on fees collected by Tamil Nadu Medical Council.2. Definition and scope of 'proceedings' under the CGST Act, 2017.3. Admissibility of the advance ruling application in light of ongoing investigations.Issue-wise Detailed Analysis:1. Applicability of GST on Fees Collected by Tamil Nadu Medical Council:The applicant, Tamil Nadu Medical Council, argued that the fees collected for registration and other services are statutory in nature and do not constitute a 'service' under GST law. They claimed that the fees are akin to taxes or duties and are collected for discharging sovereign functions, thus not liable for GST. The applicant also cited precedents and legal interpretations to support their position that the fees are not subject to GST.2. Definition and Scope of 'Proceedings' under the CGST Act, 2017:The term 'proceedings' is not explicitly defined in the CGST Act, 2017, but is used extensively throughout the Act. The judgment explored various instances where 'proceedings' is mentioned, including sections related to assessment, recovery, and adjudication. The Authority concluded that 'proceedings' encompass a wide range of actions, including inquiries and investigations, which precede the issuance of a show cause notice. The judgment emphasized that the term is broad and includes any legal action taken to enforce a right or obligation under the Act.3. Admissibility of the Advance Ruling Application in Light of Ongoing Investigations:The Authority examined whether the advance ruling application was admissible given the ongoing investigation by the Directorate General of GST Intelligence (DGGI) into the same issue. The investigation had commenced prior to the filing of the application, as evidenced by summons issued to the applicant. The Authority referenced Section 98(2) of the CGST Act, which prohibits admitting applications for advance ruling if the question is already pending in any proceedings under the Act. The Authority determined that the investigation constituted 'proceedings,' rendering the application inadmissible.Conclusion:The Authority for Advance Ruling rejected the application for advance ruling filed by the Tamil Nadu Medical Council. The rejection was based on the finding that proceedings on the same issue were already pending, thus falling under the prohibition outlined in Section 98(2) of the CGST Act. The Authority emphasized that the term 'proceedings' includes investigations, and the initiation of such proceedings precludes the admission of an advance ruling application on the same matter.