2021 (8) TMI 535 - AAR - GST

Jurisdiction/scope of advance ruling application - Debit Note can be raised by a taxable person under Sec.34(3) of the CGST Act, 2017, for difference in rate of tax charged on tax invoice arising on account of objections raised by the proper officer that the rate of tax charged on tax invoice is lower than the applicable rate though not accepted by the taxable person - declaration of details of the Debit Note in the return for the month during which such Debit Note is issued and pay / discharge tax liability in such manner as may be prescribed - entitlement to take input tax credit in respect of Debit Note raised, declared in the tax return, tax liability paid / discharged - HELD THAT - As the advance ruling is applicable only to the applicant and the jurisdictional officer of the applicant, the ruling is GSTIN specific and hence not applicable to distinct persons as specified in sub-section (4) of Section 25 of the CGST Act. In the instant case the applicant has sought ruling regarding the circumstances or situations under which a debit note can be raised, the time limit within which the debit note is to be raised and the manner of reporting of such debit note in the monthly returns. The provisions governing the issue of credit notes and debit notes and the manner of reporting them in the returns is contained in Section 34 of the CGST Act. The first question raised by the applicant is whether a debit note can be issued by the applicant for the difference of the rate of tax charged in the tax invoice as specified under section 34(3) of the CGST Act. The second question raised is whether the Bhavani branch of the applicant having GSTIN 33AABFT8331NlY in Tamilnadu can raise debit note for the difference of the rate of tax charged in the tax invoice issued to the applicant on the branch transfer and on supplies made by them to other customers. The Bhavani branch being a distinct person as per provisions of Section 25 (4) of the CGST Act is outside the jurisdiction of this authority and therefore the question raised pertains to an activity / transaction proposed to be performed by a registered person who is not within the jurisdiction of this authority. The third question is whether the applicant can avail input tax credit on such debit note raised by the Bhavani branch of the applicant which is dependent on the answer to the second question. The questions raised by the applicant are not in respect of any matter specified in sub-section (2) of Section 97 of the CGST Act and also in respect of activity / transaction proposed to be performed by a registered person who is not within the jurisdiction of this authority. This authority is a creature of statute and has to function within the limits of the jurisdiction granted to it. The questions raised by the applicant are not in respect of any matter that is specified in Section 97 (2) of the CGST Act and also in respect of activity / transaction proposed to be performed by a registered person who is not within the jurisdiction of this authority - Therefore, this authority is not having jurisdiction to issue rulings on the questions raised by the applicant.

Summary

Issues Involved:
1. Issuance of Debit Note under Section 34(3) of the CGST Act, 2017.
2. Issuance of Debit Note by Bhavani Branch and its declaration in returns.
3. Entitlement of Input Tax Credit (ITC) by Head Office on Debit Notes raised by Bhavani Branch.

Issue-wise Detailed Analysis:

1. Issuance of Debit Note under Section 34(3) of the CGST Act, 2017:
The applicant queried whether a Debit Note can be raised under Section 34(3) of the CGST Act, 2017, for differences in tax rates charged on tax invoices due to objections raised by the proper officer, even if the taxable person does not accept these objections. The applicant sought to avoid litigation and buy peace by adjusting the tax liability as per Section 34(4) of the CGST Act, 2017. The authority examined Section 34, which governs the issuance of credit and debit notes. Section 34(3) specifically allows for the issuance of debit notes when the tax charged in the tax invoice is found to be less than the tax payable. However, the authority noted that the questions raised were not within the matters specified under Section 97(2) of the CGST Act, which outlines the scope of advance rulings.

2. Issuance of Debit Note by Bhavani Branch and its Declaration in Returns:
The applicant also inquired whether the Bhavani Branch (GSTN 33AABFT8331N1ZY) could raise a Debit Note and declare its details in the monthly returns for the financial year 2020-21, addressing objections regarding lower tax rates charged on branch transfers and supplies. The authority observed that the Bhavani Branch, being a distinct entity under Section 25(4) of the CGST Act, falls outside its jurisdiction. Since the Bhavani Branch is registered in Tamil Nadu, the question pertains to an activity proposed by a registered person not within the jurisdiction of the Kerala Authority for Advance Ruling.

3. Entitlement of Input Tax Credit (ITC) by Head Office on Debit Notes raised by Bhavani Branch:
The applicant questioned whether the Head Office (GSTN 32AABFT8331N1Z0) could avail ITC on Debit Notes raised by the Bhavani Branch, based on objections regarding lower tax rates. This query is contingent on the resolution of the second issue. The authority reiterated that since the Bhavani Branch is outside its jurisdiction, it cannot issue a ruling on this matter.

Conclusion:
The authority concluded that the questions raised do not pertain to any matter specified under Section 97(2) of the CGST Act and involve activities proposed by a registered person outside its jurisdiction. Additionally, the applicant's query arose from objections raised by the Directorate General of GST Intelligence, which further restricts the authority's jurisdiction under the first proviso to Section 98(2) of the CGST Act. Consequently, the authority ruled that it lacks jurisdiction to issue a ruling on the questions raised by the applicant.