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2021 (10) TMI 58 - AAAR - GSTClassification of goods - HSN Code - applicable rate of GST - PAPAD of different shapes and sizes - pending proceedings before the DGGI Surat - scope of Advance ruling application - section 98 of the CGST Act, 2017 - HELD THAT - It appears that had the fact of pending proceedings before the DGGI Surat in applicant s own case relating to questions raised in the application filed before the GAAR been brought to the notice of the GAAR, the application for advance ruling would not have been admitted in view of the proviso to sub-section (2) of section 98 of the CGST Act, 2017 and the question of issuing advance ruling would not have arisen. However, the appellant have not informed the aforesaid material facts to the GAAR at any given point of time thereby willfully suppressing the fact from the Authority and obtaining the Ruling by suppressing the facts. Section 104 of CGST Act, 2017 stipulates that any Ruling obtained by the applicant under Section 98(4) of the CGST Act, 2017 by fraud or suppression of material facts or misrepresentation of facts , may be declared void ab-initio. The appellant has obtained the Advance Ruling by submitting application of advance ruling with suppression of material facts or misrepresentation of facts, and the application was not eligible to be admitted in view of proviso to sub-section (2) of section 98 of the CGST Act, 2017. Therefore, in terms of Section 104 of CGST Act, 2017, and the GGST Act, 2017, the advance ruling pronounced by the Gujarat Authority of Advance Ruling is liable to be declared as void ab-initio.
Issues Involved:
1. Classification of the product "Papad" of different shapes and sizes. 2. Applicable rate of SGST and CGST on the product. 3. Legality and propriety of the advance ruling under Section 98(2) of the CGST Act, 2017. 4. Suppression of material facts or misrepresentation in the application for advance ruling. Detailed Analysis: 1. Classification of the product "Papad" of different shapes and sizes: The appellant is engaged in manufacturing and trading "Papad" of various shapes and sizes, which are not ready for consumption until fried or baked. The appellant argued that their product should be classified under Chapter Tariff Heading 1905 of the Customs Tariff Act, 1975, making it exempt from tax per Notification No. 02/2017-CT (Rate) dated 28.06.2017. However, the Gujarat Authority for Advance Ruling (GAAR) observed that "Papad" is not explicitly defined under the Customs Tariff Act, 1975 or the CGST Act, 2017. Using the common parlance test, GAAR concluded that the appellant's product is more akin to "Un-fried Fryums" rather than "Papad" and should be classified under Tariff item 21069099. 2. Applicable rate of SGST and CGST on the product: Based on the classification as "Un-fried Fryums," GAAR determined that the applicable Goods and Services Tax rate is 18% (CGST 9% + GGST 9% or IGST 18%), as per Sl. No. 23 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017, as amended. 3. Legality and propriety of the advance ruling under Section 98(2) of the CGST Act, 2017: The appellant contended that the GAAR did not consider the fact that the Directorate General of Goods and Services Tax Intelligence (DGGI), Surat Zonal Unit, had initiated proceedings against them before they filed the application for advance ruling. According to Section 98(2) of the CGST Act, 2017, an application for advance ruling should not be admitted if the question raised is already pending in any proceedings under any provision of the Act. The appellant argued that the ruling should be examined for its legality and propriety under this section. 4. Suppression of material facts or misrepresentation in the application for advance ruling: The appellant admitted that they did not disclose the ongoing proceedings by DGGI in their application before GAAR. They claimed to have orally mentioned this during the personal hearing, but the records did not reflect this. The appellate authority found that the appellant willfully suppressed material facts, leading to the admission of the application for advance ruling. Under Section 104 of the CGST Act, 2017, any ruling obtained by fraud, suppression of material facts, or misrepresentation can be declared void ab initio. Conclusion: The appellate authority concluded that the appellant's advance ruling was obtained by suppressing material facts and misrepresentation. Therefore, the advance ruling No. GUJ/GAAR/R/76/2020 dated 17.09.2020 was declared void ab-initio. The authority did not find it necessary to examine other arguments presented by the appellant, as the ruling was invalidated based on the suppression of facts.
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