2021 (10) TMI 153 - AAAR - GST

Maintainability of Advance Ruling application - Classification of goods - applicable rate of SGST and CGST - PAPAD of different shapes and sizes - HELD THAT - 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.

Summary

Issues Involved:
1. Classification of the product "Papad" of different shapes and sizes under the appropriate tariff heading.
2. Applicable rate of CGST and SGST on the supply of such "Papad".
3. Admissibility of the application for advance ruling in light of pending proceedings under the CGST Act, 2017.

Issue-wise Detailed Analysis:

1. Classification of the Product "Papad":
The appellant, engaged in manufacturing and trading "Papad" of various shapes and sizes, contended that their product should be classified under Chapter Tariff Heading 1905 of the Customs Tariff Act, 1975, and be exempted from tax as per Notification No. 02/2017-CT (Rate) dated 28.06.2017. However, the Gujarat Authority for Advance Ruling (GAAR) observed that "Papad" is not defined under the Customs Tariff Act, 1975, or the CGST Act, 2017. It applied the common parlance test and marketability criteria, concluding that the appellant's product is not "Papad" but "Un-fried Fryums," classifiable under Tariff item 21069099.

2. Applicable Rate of CGST and SGST:
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, and corresponding state notifications.

3. Admissibility of the Application for Advance Ruling:
The appellant argued that the GAAR did not consider the fact that proceedings were already initiated by the Directorate General of Goods and Services Tax Intelligence (DGGI), Surat, before the application for advance ruling was filed. As per Section 98(2) of the CGST Act, 2017, the Authority shall not admit an application if the question raised is already pending in any proceedings under the Act. The appellant had incorrectly declared in Form GST ARA-01 that no such proceedings were pending. The Appellate Authority found that the appellant willfully suppressed this material fact, rendering the advance ruling void ab initio under Section 104 of the CGST Act, 2017.

Findings:
The Appellate Authority scrutinized the appeal, written submissions, and records. It noted that the appellant had indeed suppressed the fact of ongoing proceedings by DGGI, which should have precluded the GAAR from admitting the application. The Authority concluded that the advance ruling was obtained by suppression of material facts, and thus, as per Section 104 of the CGST Act, 2017, the ruling is void ab initio.

Conclusion:
The Appellate Authority declared the Advance Ruling No. GUJ/GAAR/R/78/2020 dated 17.09.2020 void ab initio due to the suppression of material facts by the appellant. Consequently, it did not find it necessary to examine other arguments presented by the appellant.