AAAR affirms s.101(1) CGST appellate-style powers, remands pure services Panchayat tender ruling dispute under Arts.243G/243W

AAAR, Gujarat held that under s.101(1) CGST Act, it has powers similar to appellate authorities under s.35A Central Excise Act and s.85(5) Finance Act, 1994, allowing it to confirm or modify advance rulings and apply established appellate jurisprudence pari materia. In the dispute concerning whether services of preparing plans, estimates and draft tender plans for building works for a State department qualify as "pure services" relating to Panchayat/Municipality functions under Arts. 243G/243W, AAAR set aside the earlier GAAR ruling dated 30.05.2024 and remanded the matter to GAAR for a fresh decision.

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The Appellate Authority for Advance Ruling in Gujarat considered an appeal filed by M/s. Devendra Kantibhai Patel against an Advance Ruling. The appellant provides Works Contract Service (WCS) and engineering consultancy services to government agencies. The key issue was whether the services provided by the appellant qualified as activities in relation to Panchayat or Municipality under the Constitution of India and were eligible for exemption from Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST).The appellant sought Advance Ruling on whether their services of preparing plans and estimates for building work for the R&B department of the Government of Gujarat qualified as activities related to Panchayat or Municipality functions and were exempt from CGST and SGST. The Gujarat Authority for Advance Ruling (GAAR) found that the appellant failed to provide sufficient details of the buildings for which services were provided, leading to the conclusion that the appellant was not eligible for exemption.The appellant contended that their services fell within the functions entrusted to Panchayat and Municipality under the Constitution, meeting the conditions for exemption. They argued that the phrase 'activity in relation to any function' in the exemption notification should be interpreted broadly to include services provided to the government. They also cited relevant rulings to support their position.After a personal hearing, the Appellate Authority reviewed the appeal papers, submissions, and the impugned ruling. They noted that the GAAR ruling was based on insufficient information provided by the appellant. In light of this, the Authority decided to remand the matter back to the GAAR for a fresh decision, emphasizing the need for a thorough examination and consideration of all aspects of the case.The Authority invoked Section 101 of the CGST Act, which allows them to confirm or modify the ruling appealed against. They highlighted the importance of ensuring justice and referred to previous rulings where matters were remanded to the Advance Ruling Authority for further consideration. The decision to remand the case back to the GAAR was based on the principle of fairness and the need for a comprehensive review of the facts presented by the appellant.In conclusion, the Appellate Authority set aside the impugned ruling and directed the GAAR to reevaluate the case with all relevant information and provide a fresh decision after giving the appellant an opportunity to be heard. The decision was made in accordance with the principles of procedural fairness and the statutory provisions governing the appellate process in tax matters.

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