Advance ruling application on refund of unutilised input tax credit for inverted duty structure denied as out of scope

An advance ruling application seeking refund of unutilised input tax credit arising from an inverted duty structure for manufacture and supply of 100% cotton yarn was held outside the scope of advance rulings because the applicant is a consultant acting for a client and the question does not relate to supplies undertaken or proposed by the applicant; the application is therefore liable to be rejected. The authority noted that an application may be rejected where the question is already decided in other proceedings and reiterated that rulings are binding but void ab initio if obtained by fraud or suppression of material facts.

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Issues: (i) Whether the question on refund of unutilised input tax credit arising from inverted duty structure, as raised by the applicant (a consultant on behalf of clients), relates to the supply of goods or services being or proposed to be undertaken by the applicant; (ii) Whether the question raised falls within the scope of Section 97(2) of the CGST Act, 2017 and thus is admissible for advance ruling.

Issue (i): Whether the question on refund of unutilised ITC (inverted duty structure) relates to the supply of goods or services being or proposed to be undertaken by the applicant.

Analysis: The application shows the applicant is a consultant acting on behalf of clients who are manufacturers and suppliers of cotton yarn. The provision defining "advance ruling" limits relief to matters in relation to supplies undertaken or proposed to be undertaken by the applicant. The facts indicate the applicant is not the manufacturer/supplier whose transactions give rise to the refund question.

Conclusion: The question does not relate to the supply of goods or services being or proposed to be undertaken by the applicant and is therefore not admissible for advance ruling in the applicant's name.

Issue (ii): Whether the question on refund of unutilised ITC falls within the scope of Section 97(2) of the CGST Act, 2017.

Analysis: Section 97(2) enumerates specific categories of questions eligible for advance ruling. The refund query raised concerns refund of unutilised input tax credit due to inverted duty structure and does not fall squarely within the listed categories for advance ruling by the applicant. Additionally, the proviso to Section 98(2) precludes admission where the question is already pending or decided in proceedings in the case of the applicant; the applicant conceded the question was already decided in a proceeding.

Conclusion: The question does not fall under the scope of Section 97(2) and the application is not admissible for advance ruling; further, the application is barred under the proviso to Section 98(2) as the question was already decided in proceedings.

Final Conclusion: The Authority rejects the application for advance ruling on the grounds that the subject question neither pertains to supplies by the applicant nor falls within the statutory scope of matters admissible under Section 97(2), and is precluded by the proviso to Section 98(2) where the question is already decided in proceedings.

Ratio Decidendi: An advance ruling application is admissible only in respect of matters relating to supplies undertaken or proposed to be undertaken by the applicant and only where the question falls within Section 97(2); an application that fails either requirement or is precluded by pending/decided proceedings under the proviso to Section 98(2) must be rejected.

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