2023 (8) TMI 1295 - AAR - GST

Maintainability of Advance Ruling application - non-disclosure of enquiry / summons under Section 70 of CGST Act as 'proceedings' in the advance ruling application - suppression of facts or not - HELD THAT - The questions raised in advance ruling application which are already pending investigation by DGGI against the applicant was brought to the attention of the AR in the personal hearings for which the applicant provided various submissions - before venturing to decide the questions on merits, the question of admissibility of the application needs to be decided in view of the intimation received from DGGI, Chennai Zonal Unit about the investigation against the applicant being conducted on the questions raised in the advance ruling application. It is found from the letters received from DGGI, Chennai Zonal Unit about the investigation being conducted against the applicant, an Incident Report No. 89/2022 dated 24.06.2022 having OR No. 89/2022 dated 16.06.2022 determining tax amount of Rs. 474 lakhs Further, the said incident report was issued after the statement deposed by Registrar of the applicant on 18.04.2022 and 14.06.2022. Therefore, it is apparent that proceedings are pending against the applicant on the date of filing of advance ruling online application on 27.06.2022 and liable to be rejected under first proviso to Section 98(2) of the Act. The advance ruling application is rejected.

Summary

Issues Involved:
1. Admissibility of the advance ruling application.
2. Definition and interpretation of 'proceedings' under the CGST Act.
3. Determination of tax liability on fees collected by the applicant.

Summary:

1. Admissibility of the Advance Ruling Application:
The applicant sought an advance ruling to determine the tax liability on services as per Section 97(2)(e) of the GST Act, 2017. The application was filed on 27.06.2022. However, the Authority found that the questions raised were already under investigation by the Directorate General of GST Intelligence (DGGI), Chennai Zonal Unit. According to Section 98(2), the Authority shall not admit an application if the questions are already pending or decided in any proceedings under the Act. The Authority concluded that the application was inadmissible due to the ongoing investigation, as indicated by the Incident Report No. 89/2022 dated 24.06.2022.

2. Definition and Interpretation of 'Proceedings' under the CGST Act:
The applicant argued that 'proceedings' should be interpreted literally and distinguished from 'enquiry' or 'summons'. They relied on various judicial pronouncements to support this view. However, the Authority noted that the term 'proceedings' is used in various sections of the Act and encompasses a broad range of activities, including investigations under Section 70. The Authority referenced the Hon'ble High Court of Andhra Pradesh's ruling in Master Mind Vs Appellate Authority for Advance Ruling, which held that an advance ruling application is inadmissible if proceedings on the same issue had commenced prior to filing.

3. Determination of Tax Liability on Fees Collected by the Applicant:
The applicant, a regulatory body, argued that the fees collected for statutory functions do not constitute a 'supply' under the GST Act and thus should not be taxed. They claimed that the fees are for discharging sovereign functions and do not involve any service rendered to the parties. The concerned State authority countered that the fees collected are for services rendered and thus are taxable. The DGGI's investigation determined a tax amount of Rs. 474 lakhs on the fees collected, considering them as consideration for supply under Section 7 of the Act.

Ruling:
The Authority for Advance Ruling, Tamil Nadu, rejected the application based on the first proviso to Section 98(2) of the GST Act, which prohibits admitting applications where the questions raised are already under investigation or decided in any proceedings under the Act.