2022 (6) TMI 767 - HC - GST

Scope of Advance Ruling application - Classification of services - rate of tax to sub-contractor - sub-contractor executes works contract pertaining to dam wherein the principal contractor is liable for tax @12% for the period from 22.01.2017 to 25.01.2018 - HELD THAT - Sub section 2 of Section 97 provides the questions on which the advance ruling can be sought under this Act. Section 98 provides the procedure for receipt of the application. The first proviso to Sub-section 2 of section 98 is coming in the way of the petitioner and relying on such provision the Authority as well as Appellate Authority have declined to grant advance ruling to the petitioner - According to the proviso the authority shall not admit the application where the question raised in the application is already pending or decided in proceedings under any of the provisions of this Act. The Petitioner approached the Authority for obtaining the advance ruling only after a search conducted on 20.03.2020 in which the evasion of SGST was found which has resulted in issuing a show-cause notice dated 21.05.2020. Since the petitioner has not paid GST @ 18% and appears to be contesting the aforesaid notice therefore the issue is treated to be pending before the Authority under the GST/SGST Act 2017 hence Authorities have rightly declined to grant advance ruling to the petitioner as the petitioner did not approach in advance before the Authority for obtaining the ruling. Petition dismissed.

Summary

Issues:
1. Interpretation of Section 98(2) of the Central Goods and Services Tax Act, 2017 regarding advance ruling.
2. Applicability of the first proviso of Section 98(2) in the context of pending proceedings.
3. Justification for declining to grant advance ruling based on the proviso.

Analysis:
1. The petitioner, a Works Contractor, sought an advance ruling regarding the rate of tax applicable to a sub-contractor in a specific scenario. The petitioner approached the Authority for Advance Ruling in Madhya Pradesh under Section 98 of the CGST Act, contending that the applicable tax rate should be 12% based on a notification. However, the Authority declined to grant the advance ruling, leading to an appeal before the Appellate Authority.

2. The crux of the issue lies in the interpretation of Section 98(2) of the CGST Act, which contains a proviso stating that the authority shall not admit an application if the question raised is pending or decided in proceedings under any provision of the Act. The petitioner argued that since no proceedings were pending against them, the Authority should have decided the tax rate issue. However, the authorities found that due to a search revealing GST evasion and a subsequent notice demanding payment, the issue was considered pending, justifying the refusal to grant the advance ruling.

3. The High Court analyzed the provisions of the CGST Act related to advance rulings, emphasizing that the purpose of seeking an advance ruling is to avoid conflicts with tax authorities. The court upheld the decision of the authorities, stating that the petitioner did not approach for a ruling in advance before the issue became pending due to the notice. Consequently, the court dismissed the petition, finding no grounds to interfere with the impugned orders.

In conclusion, the judgment delves into the nuances of seeking advance rulings under the CGST Act, highlighting the importance of timely application and the impact of pending proceedings on the admissibility of such requests. The decision underscores the procedural requirements and the rationale behind the authorities' refusal to grant an advance ruling in the specific circumstances of the case.