2024 (10) TMI 1291 - AAAR - GST

Admissibility of Advance Ruling application - Levy of GST on stamp duty registration fee paid for the purpose of a registering lease deed with registering authority - Applicability of Nil rate of tax under Sl. No. 47 of the exemption notification 12/2017-CT dtd. 28.06.2017 to stamp duty registration fee paid by the Applicant for registering their mining lease deed - stamp duty and registration fee should be treated as consideration for mining lease service, when those are actually paid for receiving service of the Government for registration of a conveyance/ lease deed - HELD THAT - In the instant case, the Applicant i.e. M/s. Geeta Rani Mohanty, Barbil, appears to have fallen under the above proviso to Section 98 (2) of the CGST Act, 2017. The Applicant opted for appeal to advance ruling at such a stage when the subject matter is already pending in the audit proceedings initiated by the Audit Commissionerate, Bhubaneswar under Section 65 of the CGST Act, 2017. Further, it is seen that DRC-01 dated 10.04.2024 has already been issued to the Applicant by the Additional Commissioner, Audit Commissionerate, Bhubaneswar demanding Rs. 6,27,74,106/- (Rupees Six Crores Twenty Seven Lakhs Seventy Four Thousand One Hundred and Six only) u/s 73 of the CGST Act, 2017. Reliance placed upon the judgement passed by the Hon ble Madras High Court in the case of M/S. ABT LIMITED, REPRESENTED BY ITS COMPANY SECRETARY, MR. S. ELAVAZHAGAN VERSUS THE ADDITIONAL COMMISSIONER OF GST CENTRAL EXCISE, O/O. THE COMMISSIONER OF GST CENTRAL EXCISE (AUDIT) , COIMBATORE 2024 (2) TMI 130 - MADRAS HIGH COURT wherein, the Hon ble Court held that during the conduct of GST Audit under Section 65 of the CGST Act, 2017, if it indicates that tax was not paid or short paid or that Input Tax Credit (ITC) was wrongly availed or utilized, the proper officer may initiate the action under Section 73 or 74 of the CGST Act under Section 65 (7) of the CGST Act. The Audit is a valid proceeding under CGST Act, 2017 and it is also covered under sub section (2) of section 98 of the Act. Accordingly, the appeal filed by the appellant against advance ruling passed on the impugned issue is liable to be rejected.

Summary

Issues:
1. Appeal against Advance Ruling under CGST Act and OGST Act regarding GST levied on stamp duty and registration fees for lease deed.
2. Admissibility of appeal application before Appellate Authority for Advance Ruling.
3. Validity of audit proceedings and applicability of CGST Act provisions.

Detailed Analysis:
1. The appeal was filed by an Applicant engaged in "Mining and Supply" of Iron Ore against an Advance Ruling order regarding the GST levied on stamp duty and registration fees paid for a lease deed. The Applicant sought clarification on the applicability of GST on these fees and whether the Nil rate of tax exemption applied. The AAR considered the case and noted the Applicant's argument against tax on tax and the statutory nature of stamp duty. The AAR rejected the application, citing the proviso to Section 98(2) of the CGST Act, as the matter was already pending in audit proceedings.

2. The Applicant, aggrieved by the AAR's ruling, filed an appeal before the Appellate Authority for Advance Ruling under Section 100 of the CGST Act, seeking to set aside the ruling and requesting a personal hearing. During the personal hearing, the Applicant's representative reiterated their submissions and argued that the audit process was not a proceeding under the GST Act. However, the Appellate Authority upheld the AAR's decision, stating that the appeal was not maintainable under the law due to the pending audit proceedings and the proviso to Section 98(2) of the CGST Act.

3. The Appellate Authority analyzed the case, considering the Applicant's submissions, the proviso of Section 98(2) of the CGST Act, and the audit proceedings initiated by the Audit Commissionerate. Referring to Section 65(7) of the CGST Act, the Authority highlighted that the audit could lead to action under Sections 73 or 74 for tax discrepancies. Citing a judgment from the Madras High Court, the Authority affirmed the validity of the audit as a proceeding under the CGST Act and concluded that the appeal against the Advance Ruling was not maintainable. Therefore, the application was rejected under Section 98(2) of the CGST Act.

This detailed analysis outlines the legal proceedings and decisions regarding the appeal against the Advance Ruling, emphasizing the significance of audit proceedings and the proviso to Section 98(2) of the CGST Act in determining the admissibility of the appeal before the Appellate Authority for Advance Ruling.