2021 (3) TMI 575 - AAR - GST

Maintainability of Advance Ruling application - application not filed in proper format - Double Taxation relief - freight portion of imported goods - Goods imported and IGST levied on CIF Value (which includes freight) Plus Basic Custom duty plus Social Welfare Cess - IGST levied again on the freight component (Ocean Freight) on reverse charge basis. HELD THAT - On a combined reading of the provisions of the aforementioned Section 97 and Rule 104 of both the aforementioned Acts and Rules, we find that the application for obtaining an Advance Ruling under sub-section(1) of Section 97 is to be submitted in FORM-GST ARA-01 and shall be accompanied by a fee of Ten thousand rupees (Five thousand rupees as per Rule 104 of the CGST Rules, 2017 Five thousand rupees as per Rule 104 of the GGST Rules, 2017). The applicant has not paid the fees of ₹ 10,000/- under the proper head i.e. CGST and GGST as required under the provisions of aforementioned Sections and Rules where as paid fees of ₹ 10,000/- under IGST head. Therefore, the instant application is liable for rejection under Section 98(2) of the CGST Act, 2017 for not paying the total fees of ₹ 10000/- i.e. under each head CGST GGST as required under the provisions of CGST Act and Rules and respective GGST Act Rules. Instant application filed by M/s. Khaitan Chemicals and Fertilizers Ltd., Bharuch is hereby rejected under Section 98(2) of the CGST/GGST Act, 2017 being non-maintainable.

Summary

Issues:
1. Applicability of IGST on imported goods
2. Double taxation on freight component of imported goods

Analysis:
1. The applicant, engaged in manufacturing fertilizers and chemicals, imports raw materials like Rock Phosphate on CIF basis. They pay customs duty and IGST on the CIF value of the goods. The applicant claims that levying IGST on the sum of CIF value and customs duty amounts to double taxation as they also pay IGST on the Ocean Freight component separately under Reverse Charge Mechanism. The applicant sought clarification on the issue of double taxation on the freight portion of imported goods.

2. The Advance Ruling Authority examined the provisions of the IGST Act, Customs Tariff Act, and Customs Valuation Rules to determine the correct levy of IGST on imported goods. The Authority noted that the applicant had not paid the required fees under the CGST and GGST heads as mandated by the relevant provisions. Due to this non-compliance, the application was deemed invalid and liable for rejection under Section 98(2) of the CGST Act, 2017. The Authority emphasized the importance of adhering to statutory requirements for filing applications for Advance Ruling.

3. Despite the detailed submissions by the applicant and the legal framework provided, the Authority focused on the procedural lapse regarding fee payment. As the applicant failed to pay the total fees under the CGST and GGST heads, the application was rejected. The ruling highlighted the significance of compliance with statutory provisions for maintaining the validity of applications seeking Advance Ruling.

4. In conclusion, the judgment rejected the application of M/s. Khaitan Chemicals and Fertilizers Ltd. under Section 98(2) of the CGST/GGST Act, 2017 due to non-compliance with fee payment requirements. The ruling underscored the necessity of fulfilling all statutory obligations when submitting applications for Advance Ruling to the Authority.