2020 (9) TMI 353 - AAR - GST

Maintainability of application for advance ruling - first proviso to Section 98(2) of the CGST Act 2017 - initiation of investigation was done prior to filing of the instant application - Classification of goods - rate of tax - flavoured Milk - taxable at the rate of 5% under Schedule-IV of GST Act or not - HELD THAT - The first proviso to Section 98(2) of the CGST Act 2017 does not specify as to with whom the issue pertaining to the question raised has to be pending, but merely specifies that it has to be pending or decided under the provisions of this Act. Hence the argument of the applicant that the issue must be pending before the jurisdictional officer is not tenable under the law. In the instant case, the Deputy Commissioner, Office of the Principal Commissioner of Central Tax, Bangalore East Commissionerate, Bangalore have reported vide their letter dated 18.08.2020 that the Directorate of GST Intelligence, Bangalore Zonal Unit have initiated the investigation against the applicant, with regard to mis-classification of flavoured milk , under Incident Report No.35/2019-20, which is under progress. DGSTI has recorded the statements of the authorised representatives of the applicant and the applicant has also paid ₹ 2.97 Lacs towards pre-deposit. Further it is an admitted fact that the initiation of investigation was done prior to filing of the instant application, by issuing summons dated 18.02.2019, 15.03.2019 14.08.2019 - Thus all the required three conditions have been satisfied in the instant case and hence the application is liable to be treated as inadmissible. The application is rejected as inadmissible , in terms of first proviso to Section 98(2) of the CGST Act 2017.

Summary

Issues:
Classification of flavored milk for GST rate determination.

Analysis:
The applicant, engaged in processing milk products in Andhra Pradesh and selling in Karnataka, sought an advance ruling on the GST rate for flavored milk. The admissibility of the application was contested based on the first proviso to Section 98(2) of the CGST Act 2017. The proviso prohibits admitting an application where the issue is pending or decided under the Act. The applicant argued that the issue must be pending before the jurisdictional officer, but the law does not specify this requirement. The Deputy Commissioner reported an investigation by the Directorate of GST Intelligence against the applicant for misclassification of flavored milk, satisfying the conditions for inadmissibility. The investigation was initiated before the application was filed, with statements recorded and a pre-deposit made by the applicant. Consequently, the application was deemed inadmissible under the mentioned provision.

This ruling highlights the importance of adherence to procedural requirements for advance ruling applications under the GST Acts. The judgment clarifies that the issue need not be pending before the jurisdictional officer but must be pending or decided under the provisions of the Act. The investigation by the Directorate of GST Intelligence against the applicant for misclassification of flavored milk, initiated before the application, led to the application's inadmissibility. The ruling emphasizes the significance of fulfilling all conditions for admissibility, including the status of the issue under consideration. The decision underscores the need for applicants to ensure compliance with procedural aspects to avoid inadmissibility of their advance ruling applications.