TaxTMI 
TaxTMI 
2024 (8) TMI 643
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.... "FERRORS APPARENT ON THE FACE OF RECORD 9. In this respect, it is stated that no opinion has been expressed on the following questions on which Advance Ruling has been sought a. Whether the Company is eligible io avail the input tax credit ('ITC') of integrated tax ('IGST') paid as part of differential Customs duty for imports made during the relevant period in terms of the timeline prescribed under Section 16 (4) of the CGST Act? b. Whether documents evidencing payment can be considered as a valid duty paying document for the purpose of availing ITC of the IGST paid as part of differential Customs duty paid during the relevant period, in terms of Section 16 (2) of the CGST Act, 2017 read with rule 36 (3) of CGST Rules 2017? 10. The Ld Authority has only expressed opinion on the question "Whether the provisions prescribed under the Goods and Services Tax ('GST') law imposes any restriction on availment of ITC of the differential IGST paid post on-site audit by Customs". The Ld. Authority has stated that Section 129 and Section 130 of the CGST Act is not applicable in the instant case and Section 74 is applicable since the Applicant has made pa....
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....ained from answering the remaining two questions, the Ld. Authority will also not entertain or prefer to answer such questions in appeal. This will absolve the purpose of filing of appeal by the Applicant against the OIO since an appeal only against the third question will itself defeat the entire purpose. Therefore, it is important for the Applicant to first file the rectification application to obtain answer on the two questions before an appeal can be preferred to the Ld Appellate Authority." PERSONAL HEARING 3.1 Mr. Deepak Suneja, Advocate and Mr. Mahesh Kumar, Senior Manager, M/s. Mitsubishi Electric India (P) Ltd., appeared as authorized representatives (AR) for the personal hearing held on 28.05-2024. 3.2 The AR explained that the instant application is for rectification of errors apparent on the Advance Ruling Order No. 116/AAR/2023 dated 22.11.2023 passed by the Authority for Advance Ruling, Tamilnadu (AAR). The AR contended that having admitted the application in the first place, the AAR ought to have passed rulings in respect of all the three queries raised by the applicant. During the personal hearing, the AR furnished a synopsis cum paperbook that contained th....
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.... 7. Additionally, with respect to Question No. 3 as to availability of Input Tax Credit of the differential IGST paid post on-site customs audit, following errors are apparent, which should be correct, and consequent effect should be given, Import IGST is duty of customs under the Customs Act not a levy under IGST Act 8. At Para of the order, the AAR correctly observed as under: "After discussions with the Customs authorities, the applicant made payment of differential customs duty as applicable during the relevant period, The said payment, has been made by the Company during the year 2022 vide demand drafts". 9. Further) a perusal of TR-6 Challan (page 24 of the original application) shows "Major Head '00373-Customs Duties" and the Demand Draft (page 26 of the original application) shows "Customs Duty A/c PIB...." 10. However, at Para 8.7 of the Order, the AAR has mentioned "the differential IGST payable gets covered under the Integrated Goods and Services Tax Act, 2017". 11. Further from the judgment in Hyderabad Industries v. UOI [1999 (108) E.L.T. 321 (S.C.)] - para 14, the Constitution Bench of Supreme Court has he....
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.... of advance ruling', etc., are provided under Sections 95 to 106 in 'Chapter XVII' of the CGST/TNGST Acts 2017. The Section 102 relates specifically to Rectification of Advance Ruling', which reads as below "102. Rectification of advance ruling.-The Authority or the Appellate Authority or the National Appellate Authority] may amend any order passed by it under section 98 or section 101 or section 101C, respectively, so as to rectify any error apparent on the face of the record, if such error is noticed by the Authority or the Appellate Authority or the National Appellate Authority on its own accord, or is brought to its notice by the concerned officer, the jurisdictional officer, the applicant, appellant, the Authority or the Appellate Authority within a period of six months from the date of the order: Provided that no rectification which has the effect of enhancing the tax liability or reducing the amount of admissible input tax credit shall be made unless the applicant or the appellant has been given an opportunity of being heard. 4.3 We would like to make it clear that when Section 102 of the CGST Act, 2017, falling under 'Chapter XVII - Advance Ruling' spec....
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.... that when a question raised by the applicant has not been answered in the Advance Ruling or the Appellate Order erroneously or due to oversight without assigning any reasons thereof, it becomes a case fit for rectification of error under Section 102 of the CGST Act, 2017. Whereas, when an Authority for Advance Ruling or an Appellate Authority for Advance Ruling has refrained from answering any question or questions citing reasons for the same, it becomes a reasoned Ruling/ Order, and it cannot be seen as a mistake or an error meant for rectification under Section 102 of the CGST Act, 2017. It is clear that in such cases, only the remedy of appeal under Section 100 of the CGST Act, 2017, lies with the applicant in respect of the advance ruling/order against which they feel aggrieved. Therefore, in the instant case, the applicant ought to have filed an appeal within the time frame prescribed therein, especially when they are questioning the legality and correctness of the ruling pronounced. 4.5.1 In this regard, it is seen that the applicant has placed reliance on the order of the jurisdictional Hon'ble Tamil Nadu AAAR in the case of M/s Erode City Municipal Corporation dated 12 ....
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....lows:- "In respect of Q. No.2, the transaction between the corporation and the contractor as listed in Sl. No. 1 to 9 and 13, except at Sl. No.5A--------." 4.5.3 Accordingly, the Order dated 12.01.2023 for rectification of error passed by the AAAR vide A.R. Appeal No. 09/2021/AAAR-ROE, sets right the error/lapse by way of rendering decisions respect of Sl.Nos. 10, 11 and 12. While doing so, the Appellate Authority has also explained the reasons in detail in paras 7 to 10 of the said order, as to why the lapse in not answering the said queries has occurred, and as to why the same are required to be answered. Under these circumstances, it becomes clear that the confusion owing to the enormity of the activities involved end the complexity of the questions framed, has led to the said error in the initial stages of passing the orders on advance ruling. This was also due to the fact that each question was with reference to activities specified therein, but different from each other, and also due to the fact that the clarification was sought on two or more grounds per activity. We therefore feel that such cases are fit to be applied for 'rectification of error', as it is obvio....
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....by the Authority on matters or on questions in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. We find that in the instant case, the moot question to be answered is the admissibility of ITC of the differential IGST paid post on-site audit by Customs authorities, which is in relation to the activity undertaken or proposed to be undertaken by the applicant. Accordingly, the other questions as to whether the applicant is eligible to avail ITC in terms of the timeline prescribed under Section 16 (4) of the CGST Act, 2017, and whether the documents evidencing payment can be considered as valid documents for availing ITC in terms of Section 16 (2) of the CGST Act, 2017 read with rule 36 (3) of CGST Rules, 2017, would be rendered redundant, once the main question is answered in negative. Further, we are of the opinion that even in the event of answering the main query clause (c) in the affirmative, the other two questions at clauses (a) and (b) need not be answered, as the Authority for Advance Ruling is not required to provide clarifications on procedures that are already prescribed under the statute, or under the Notifi....
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....s are to be raised before the assessing officer who is the proper officer to decide whether the method adopted by the Appellant in complying with the provisions of Rule 42 of the CGST Rules is correct or not. We therefore, we agree with the lower Authority that no ruling can be given on the second question." 4.5.7 It may be noted that in the instant case of the appellant, only the query at clause (c) seeks answer on the 'admissibility of input tax credit of tax paid or deemed to have been paid' whereas the other two queries at clauses (a) and (b) are a corollary to the main query and dependent on the outcome of the main query at clause (c). Therefore, it is to be understood that all the queries are Liable to be admitted in the initial stage of an application being filed, as the decision on the admissibility of ITC can be arrived at, only on examining the records, facts and circumstances of the case and the question of answering the other related queries are dependent on the outcome of the main query. 4.5.8 Notwithstanding the above, it could be seen that paras 8.12 and 8.13 of the Advance Ruling No. 116/AAR/2023 dated 22.11.2023 passed in the instant case, reads as "....
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....t, 1975. 4.6.2 It may be noted that with the advent of GST with effect from 1.07.2017,. new enactments have come into force and the provisions of the same are to be applied in the current scenario. Further, the judgement of the Hon'ble Supreme Court passed in the year 1999, as referred above does not apply to the instant case, since various amendments have already been carried out in the Customs law, so as to accommodate the element of GST (IGST on Import Of Goods) in it, Precisely, Section 3 (7) of the Customs Tariff Act, 1975, which is amended in consonance with the proviso to Section 5 (1) of the IGST Act 2017, which deals with import of goods, as it stands now, and the relevant provisions, viz., Section 5(1) of the IGST Act 2017 including the proviso to Section 5(1), are reproduced hereunder for appreciation, i.e., Section 5. Levy and collection under IGST Act 2017;- 5. (1) Subject to the provisions of sub-section (2), there shall be levied a tax called the integrated goods and services tax on all inter-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 of....
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....t in any other provision. They stated that even under Section 28 (5) of the Customs Act, fifteen percent of penalty is prescribed. Further, because of the rectification in error the differential IGST paid under the Customs Act does not attract the provisions of Section and accordingly the credit should be admissible to the Applicant. 4.7.2 It may be noted that tie short-payment of taxes on import of goods involves two segments, viz., the dudes of Customs under the Customs enactments and IGST under the GST enactments, i.e.: under the IGST Act, 2017, as discussed already in para 4.6.2 above. It follows therefrom that while the differentia] duties of Customs are recoverable under 28 of the Customs Act, the corresponding taxes under IGST is liable to be recovered under Section 74 of the CGST Act, 2017, as made applicable to IGST vide Section 20 of the IGST Act, 2017. 4.7.3 The appellant goes on to state that 15% penalty is also prescribed under Section 28 (5) of the Customs Act, 1962, apart from the mention of the same in Section 74 (5) of the CGST Act, 2017, and therefore to state that 15% penalty is only found in Section 74 (5) is erroneous. In this regard it could be seen that....
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....e that pavesway for conclusion of proceedings. It therefore becomes clear that payment of 15% penalty on the differential duties of Customs and on the taxes under IGST are meant for conclusions of proceedings on both fronts, i.e., both Customs and GST, by reason of collusion or any wilful mis-statement or suppression of facts, whereby the stand of the AAR in Advance Ruling No. 116/AAR/2023 dated 22.11.2023, stands vindicated. Once it is clear that IGST is leviable under Section 5 of the IGST Act, 2017, the payment of penalty at on the same can be made only under Section 74 (5) of the CGST Acts 2017, read with Section 20 of the IGST Act and therefore we are of the opinion that no rectification is warranted in this case as well, as no error or mistake is noticed. 4.7.5 Accordingly, since no error apparent on the face of the record is noticed in the instant case, no rectification is required to be made as discussed in detail above, and as the provisions of the Customs Act do not get attracted in the instant case, the differential IGST paid by the applicant becomes ineligible for availment of ITC, in terms of Section of the CGST Act, 2017. 5. In effect, we find that there is n....