TaxTMI 
TaxTMI 
2024 (2) TMI 896
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.... The applicant supplied the required details to DGGI. He further filed an application for Advance Ruling, before the Authority for Advance Ruling, Gujarat State (AAR) on 30.11.2020. 5. The applicant raised the following two questions vide the above application viz,- "[a] What is the appropriate classification & rale of GST applicable on supply of plastic toys under CGST & SGST? [b] Can the applicant claim ITC in relation to CGST-IGST separately in debit notes issued by the supplier in the current financial year i.e. 2020-21, towards the transactions for the period 201 8-19" 6. On 23.12,2020, GAAR conducted hearing in relation to admission and admitted the application vide its order dated 30.12.2020 holding that no proceedings are pending on the question raised in said application for Advance Ruling. 7. The GAAR thereafter vide its Order No. GUJ/GAAR/R/10/2021 dated 20.01.2021 gave the following ruling in respect of the aforementioned two questions viz Answer to [a]: The classification of the product 'Plastic toys' manufactured and supplied by the applicant M/s. I-tech Plast India Pvt. Ltd. Survey No. 108-109, Bhavnagar-Rajkot Highway, Shampara, Bhavnagar (as per the First ....
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.... 30.11.2020. Hence, they have suppressed the material facts of an investigation pending against them by DGGI, Pune Zonal unit on the issue of classification of plastic toys (one of the question raised) at the time of seeking advance ruling on the same. It is further mentioned at para 11 that an appeal may be filed under section 100 with the Gujarat Appellate Authority for declaring the advance ruling order data 20.1.2021 as void ah initio." 10. Registry vide letter dated 17.3.2023 granted personal hearing on 23.3.2023, to decide whether the order of GAAR dated 20.1.2021 is required to be declared as void ab initio in terms of the provision of section 98 of the CGS I Act, 2017 read with section 104 of the CGST Act, 2017. The applicant vide his letter dated 21.3.2023 sought adjournment. Further hearings were held on 8.5.2023 and 9.11.2023, wherein he reiterated his submissions stressing the fact that proceedings as mentioned in section 98(2) and inquiry were different. 11. In a detailed submission before GAAR dated 4.5.2023, the applicant raised the following averments viz,- [a] When the application for Advance Ruling was filed, admitted and finally disposed of, no proceedings on....
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....b) of the U.P GST Act/ CGST Act. 8.4 Provisions of Section 70 has been enacted for collecting evidence in matters involving tax evasion which may also lead to demands and recovery under Section 73 or Section 74, as the case may he. When action for assessment, demand and penalty etc. is taken, that shall amount to proceedings referable to Section 6(2)(b) of the Act but the inquiry under Section 70 is not a proceeding referable to Section 6(2)(b) of the Act. 8.5 Further, phrase "subject-matter", or the phrase "on the same subject matter", used in Section 6(2)(b) of the Act with reference to any proceedings, means the same cause of action for the same dispute involved in a proceeding before proper officer under the both acts. 8.6 Therefore, in the given case, no proceeding has been initiated by a proper officer against the petitioner on the same subject-matter referable to Section 6(2)(b) of the U.P.G.S.T. Act. It is merely an inquiry by a proper officer under Section 70 of the C.G.S.T. Act." [g] That in the case of M/s. Liberty Oil Mills [AIR 1984 SC 1271] the Hon'ble SC held that "Investigation means no more than process of collection of evidence or the gathering of material....
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....r show cause notice had been issued by DRI or any other Authority, it would be erroneous to hold that the question of classification was pending before any Custom officer, Appellate Tribunal or any Court. [p] That the term 'proceedings' as per the proviso, does not cover any and all steps/actions that the Department may take under the Acts; that it includes within its ambit any proceedings that may result in the nature of show cause notice or order etc. which can be decided by the competent authority and cannot include proceedings initiated by Investigating agencies, such as DGGI, who are merely empowered to investigate and issue a show cause notice pursuant to such investigations; that in the present case, there was no pending proceedings to invoke the proviso to section 98 (2). [q] It is a well-settled law that issuance of show' cause notice is a starting point of any legal proceedings against an assessee and that they would like to rely on Master Circular on Show Cause Notice, Adjudication and Recovery (Circular No. 1053/02/2017-CX) dated 10.3.2017 of the Central Board of Excise and Customs; that in the present case, no show cause notice has been issued to the applicant. [....
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....der any of the provisions of this Act : Provided further that no application shall be rejected under this sub-section unless an opportunity of hearing has been given to the applicant : Provided also that where the application is rejected, the reasons for such rejection shall be specified in the order. Section 104. Advance ruling to be void in certain circumstances. (1) Where the Authority or the Appellate Authority [or the National Appellate Authority]finds that advance ruling pronounced by it under sub-section (4) of section 98 or under sub-section (1) of section 101 for under section 101C] has been obtained by the applicant or the appellant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void ah initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the applicant or the appellant as if such advance ruling had never been made : Provided that no order shall be passed under this sub-section unless an opportunity of being heard has been given to the applicant or the appellant. Explanation. The period beginning with the date of such advance ruling and ending with t....
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....g and paying IGST @12% instead of 18% as detailed above. During the course of preliminary investigations M/s I Tech accepted the short payment vide their letter dated 14.10.2020 and initially paid differential GST by issuing debit note for the supplies made during the period F.Y. 2019-20. They paid the differential IGST of Rs. 2,19,50,311/- alongwith interest of Rs. 40,87.542/- for the supplies made in the F.Y. 2019-20 by filing GSTR 3B for the month of September. 2020. 5. Further investigations are m progress. 16. I Tech vide its letter dated 14.10.2020 addressed to DGGI in paras 10 to 12 stated as follows:- 10. Additionally, I-Tech has been a dutiful tax payer since the inception of its operations in 2011 under the Central Excise regime and there has been no lapse in compliance of the relevant provisions of the law 11. However, to avoid any future litigation, we have decided to discharge differential liability i.e. 6% on our products to be classified in the residuary entry and chargeable to GST at 18% from 1st April 2019 onwards. as per discussion with DGGI Authorities Since the differential payment of tax tor the FY 2019-20 would be available as credit to our buyers and i....
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....s to pay the differential duty along with interest for whatever reasons, can the applicant post such payment claim that no proceedings under the Act were initiated/pending against him. 21. After taking into consideration the submissions of the applicant, CGST Bhavnagar, SGST Bhavnagar, DGGI, Pune, we are of the view that proceedings were initiated against the applicant were never disclosed to the authority. In-fact, in the personal hearing dated 8.5.2023, the applicant on being asked informed that the said fact was not informed to the authority. In view thereof, the aforementioned GAAR order dated 20.1.2021 is void in terms of section 104 of the CGST Act 2017 on non-disclosure of fact of pendency of proceedings. Our view is also substantiated by the below mentioned findings. 22.1 Proviso to section 98(2), ibid reproduced supra, clearly states that the AAR shall not admit the application where the question raised in the application is already pending or decided in any proceedings in the case of an applicant under any of the provisions of this Act; that the rejection of the application will be only after providing a reasonable opportunity and that the reasons for such rejection sha....
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....d on 01.07.2019. Copy of panchnama proceedings filed along with the writ petition contains a detailed examination of the petitioner by the Senior Intelligence Officer. The question numbers 9 to 16 relate to the courses conducted by the petitioner, the registration of the petitioner institution under GST Act and its payment of tax etc. particulars, which can be said to be concerning to the provisions of the CGST/APGST Act. Therefore, it can be said that the investigation was commenced even prior to the filing of the application by the petitioner before ARA. 13. Having regard to the legal position that when investigation has already commenced prior to the filing of application, the ARA shall not admit the application as per proviso to sub-section (2) of Section 98, we are of the view that the ARA should not have admitted the application in the instant case and issued its ruling. Therefore, the said order dated 05.03.2020 is vitiated by law. This fact was brought to the notice of the appellate authority in the grounds of appeal. Though the said ground is mentioned, unfortunately, the appellate authority has not given its finding on the said ground raised by the petitioner. Therefore....