2024 (10) TMI 435 - AAR - GST

Admissibility of the Advance Ruling application in view of the investigation initiated by DGGI - Definition and scope of 'proceedings' under the CGST Act, 2017 - scope of 'proceedings' under the CGST Act, 2017 - Levy of GST on fees collected by the Tamil Nadu Nurses and Midwives Council - HELD THAT - An advance ruling is not required to be pronounced once an investigation is initiated against the applicant under the provisions of the CGST Act, or the GST Act of the respective State or Union Territory, involving the same issue on which the query for advance ruling has been raised. It is also opined that pronouncing a ruling on the same issue in respect of which a show cause notice has been issued, may vitiate the adjudication proceedings involving the said notice. At this juncture, it becomes imperative to analyse as to whether the query raised in the application for advance ruling is the same on which the investigation was initiated, and whether the investigation proceedings precedes the application for advance ruling. Further, it is seen that while the application for advance ruling in the instant case was received on 28.06.2022, the first summon issued by the Senior Intelligence Officer, DGGI, Chennai Zonal Unit is dated 12.04.2022 based on which a statement has been recorded from Dr. S. Ani Grace Kalaimathi, Registrar of Tamil Nadu Nurses and Midwives Council on 18.04.2022, wherein the details of charges/fees collected by Tamil Nadu Nurses and Midwives Council for the period from 01.07.2017 to 31.03.2022, through their letter in Ref. No. 1538/NC/2022 dated 18.04.2022 is seen to have been communicated. Through another statement dated 14.06.2022, the legalities relating to taxability in the instant issue, is seen to have been discussed in a detailed manner. The initiation of investigation by way of issue of summons; recording of statements dated 18.04.2022 and 14.06.2022; furnishing of details/ documents by the applicant on 18.04.2022 in relation to the issue involved in the instant case; issue of Incident Report No. 89/2022 dated 24.06.2022 issued by the DGGI, Chennai Zonal Unit, all precede the date of filing of advance ruling application, i.e.. 28.06.2022 by the applicant. The application for advance ruling dated 28.05.2022 by the applicant is liable for rejection under the first proviso to Section 98 (2) of the CGST / TNGST Acts, 2017, in view of the fact that proceedings on the same issue was already initiated and pending against the applicant. The advance ruling application is rejected.

Summary

Issues Involved:

1. Admissibility of the advance ruling application under Section 98(2) of the CGST Act, 2017.
2. Definition and scope of the term "proceedings" under the CGST Act, 2017.
3. Whether the investigation by DGGI constitutes "proceedings" affecting the admissibility of the advance ruling application.
4. Applicability of GST on fees collected by the Tamil Nadu Nurses and Midwives Council.

Issue-wise Detailed Analysis:

1. Admissibility of the Advance Ruling Application:

The primary issue revolves around the admissibility of the advance ruling application under Section 98(2) of the CGST Act, 2017. The Authority for Advance Ruling (AAR) is mandated not to admit an application if the question raised is already pending or decided in any proceedings under the Act. In this case, the application was filed on 28.06.2022, but prior to this, an investigation had been initiated by the DGGI, Chennai Zonal Unit, as evidenced by the issuance of summons and recording of statements from the applicant's representatives. Consequently, the application was deemed inadmissible due to the pre-existing investigation on the same issue, thus leading to its rejection.

2. Definition and Scope of "Proceedings":

The term "proceedings" is not explicitly defined in the CGST Act, 2017, but it is extensively used in various contexts throughout the Act. The judgment elaborates that "proceedings" can include any action that precedes the issuance of a show cause notice, such as inquiries, investigations, audits, and assessments. The judgment emphasizes that "proceedings" should be interpreted broadly to encompass all actions taken to enforce legal rights under the Act. The analysis includes references to various sections of the CGST Act where the term is used, indicating its comprehensive nature.

3. Investigation by DGGI as "Proceedings":

The investigation initiated by the DGGI, including the issuance of summons and recording of statements, was considered as "proceedings" under the CGST Act. The judgment clarifies that the commencement of an investigation is a significant step in the enforcement process and thus constitutes "proceedings." The inquiry by DGGI was deemed to be judicial proceedings within the meaning of sections 193 and 228 of the IPC, which deal with false evidence and insult to public servants. The judgment rejects the applicant's argument that such investigations do not fall within the ambit of "proceedings," affirming that they do impact the admissibility of the advance ruling application.

4. Applicability of GST on Fees Collected:

The applicant argued that the fees collected by the Tamil Nadu Nurses and Midwives Council were for discharging statutory functions and did not constitute a supply of services under GST. However, the State authority contended that the Council charges various fees for services rendered, which should be treated as taxable services under the GST Act. The judgment did not delve into the merits of this argument due to the inadmissibility of the application, but it highlighted the ongoing investigation concerning the taxability of such fees.

Conclusion:

The application for advance ruling was rejected based on the ongoing proceedings initiated by the DGGI, which predated the application. The judgment underscores the broad interpretation of "proceedings" under the CGST Act, affirming that investigations are included within its scope, impacting the admissibility of advance ruling applications. The ruling refrained from addressing the substantive issue of GST applicability on the fees collected due to the procedural bar.