2020 (7) TMI 111 - AAR - GST

Maintainability of Advance Ruling application - issue pending before the Jurisdictional authority - Classification of goods - Unmanufactured Chewing Tobacco - applicability of N/N. 01/2()17-Compensation Cess-(Rate) - HELD THAT - As per the first proviso to Section 98(2) of CGST/SGST Act, 2017 the authority shall not admit the application where the question raised in the application is already pending or decided in any proceeding in the case of an applicant under any of the provisions of this Act. In the case at hand, it is established that on the issues raised by the applicant before this authority, the Central Tax authorities have initiated proceedings and the same is pending before the Jurisdictional authority at the time of filing of this application. Therefore, the application cannot be admitted and is to be rejected without going into the merits of the issue.

Summary

Issues Involved:
1. Classification of the product "Chewing Tobacco" manufactured by the applicant.
2. Applicability of Notification No. 01/2017-Compensation Cess-(Rate).
3. Whether the issue was already pending before the appropriate authority at the time of filing the application for advance ruling.

Issue-wise Detailed Analysis:

1. Classification of the product "Chewing Tobacco" manufactured by the applicant:
The applicant, a manufacturer of chewing tobacco, sought an advance ruling on the classification of their product under the GST regime. They initially classified their product under HSN 24039990 post-July 2017, while it was previously classified under HSN 24039910 up to June 2017. The applicant contended that their product should be classified under "Other manufactured tobacco" and not under the specific heading suggested by the tax authorities.

2. Applicability of Notification No. 01/2017-Compensation Cess-(Rate):
The applicant also sought clarity on the applicability of Notification No. 01/2017-Compensation Cess-(Rate) to their product. The tax authorities, during their investigation, pointed out that the product "Branded Chewing Tobacco without lime tube" should be classified under HSN 24039910, attracting a GST Compensation Cess of 160% as per the said notification. The applicant, however, believed their product was subject to a lower compensation cess rate of 96%.

3. Whether the issue was already pending before the appropriate authority at the time of filing the application for advance ruling:
The original authority rejected the application under the first proviso to Section 98(2) of the CGST/TNGST Act 2017, which prohibits admitting an application if the issue is already pending before any authority. The applicant appealed this decision, arguing that their application was initially accepted and there were no pending issues during the preliminary hearing. However, the appellate authority remanded the matter back to the lower authority to verify if the issue was indeed pending.

Upon remand, it was established that the Central Tax authorities had issued a summon on 08.01.2019 and recorded a statement on 09.01.2019 from the applicant's managing partner, which included discussions on the classification of the product and applicable compensation cess. The investigation was thus found to be addressing the same issues raised in the advance ruling application, confirming that proceedings were pending at the time of filing the application.

Conclusion:
The lower authority, upon reconsideration, confirmed that the application could not be admitted due to the pending proceedings on the same issue, in line with the first proviso to Section 98(2) of the CGST/TNGST Act 2017. The application was therefore rejected without delving into the merits of the classification and compensation cess applicability.