2021 (11) TMI 268 - AAR - GST

Applicability of reduced GST rate vide Notification No.20/2017, dated 22-08-2017 as well Notification No.1/2018-CT(Rate), dated 25-01-2018 from 01-07-2017 -works rendered by the constituents of the Joint Venture - to be treated as sub-contract to Joint Venture, which is not having physical existence other than the constituents? - HELD THAT - As seen from the information provided by the DGGI the investigation proceedings are still pending under Chapter XIV of the CGST Act, 2017 with respect to the questions raised by the applicant. When seen in light of the amendment to Section 83(1), the pending investigation after inspection or search have to be interpreted as pending proceedings in light of rules of interpretation and law declared by the Hon ble Supreme Court of India in Raghubansh Narain Vs Govt. of UP 1966 (9) TMI 145 - SUPREME COURT . Thus as the proceedings are pending under Chapter-XIV of the CGST Act, 2017 regarding the question raised by the applicant, the application filed by M/s. Megha Engineering Infrastructures Limited stands rejected.

Summary

Issues:
1. Admissibility of the application under Section 98(4) of the CGST Act and TGST Act.
2. Clarification on the reduced GST rate applicability from specific dates.
3. Determination of whether works by Joint Venture constituents are treated as sub-contracts.
4. Impact of pending proceedings by DGGI on the advance ruling application.

Admissibility of the Application:
The application filed by M/s. Megha Engineering & Infrastructures Limited was admitted as the query raised fell within the ambit of Section 97(2)(e) of the GST Act. The applicant paid the requisite fee and declared that the questions raised were not decided by any authority under the GST Act, making the application admissible.

Clarification on Reduced GST Rate:
The applicant sought clarification on the applicability of reduced GST rates from specific dates. They inquired whether the reduced rates were applicable from 01-07-2017 and whether works by Joint Venture constituents qualify as sub-contracts. This clarification was crucial for understanding the tax implications on their works executed for the Government of Telangana.

Impact of Pending Proceedings:
During the personal hearing, it was revealed that the DGGI, Hyderabad Zonal Division had initiated an inquiry into the applicant's business activities. The authority noted that the application could be rejected if the question raised was pending or decided in any proceedings involving the applicant. The DGGI confirmed that investigation proceedings were ongoing, and no demand or show cause notice had been issued yet. As per the amended Section 83(1) of the CGST Act, pending investigations under Chapter-XIV were considered pending proceedings. Consequently, the application by M/s. Megha Engineering & Infrastructures Limited was rejected due to the ongoing investigation by the DGGI.

In conclusion, the Authority for Advance Ruling, Telangana rejected the application by M/s. Megha Engineering & Infrastructures Limited due to the pending proceedings by the DGGI under Chapter-XIV of the CGST Act, 2017. The clarification sought by the applicant regarding the reduced GST rates and the treatment of works by Joint Venture constituents as sub-contracts could not be addressed in light of the ongoing investigation.