2025 (2) TMI 1089 - AAAR - GST

Maintainability of Advance ruling application - whether the issuance of a summons under Section 70 of the CGST Act constitutes a proceeding under the first proviso to Section 98(2) of the CGST Act? - HELD THAT - While the term any proceedings contained in the phrase in proviso to Section 98 (2) of the CGST Act 2017 viz. in any proceedings in the case of the applicant under any of the provisions of this Act by itself conveys an exhaustive picture the additional usage of the words under any of the provisions of the Act makes it all the more broader and all encompassing. It is opined that the usage of the words any proceeding in the proviso to Section 98 (2) of the CGST Act 2017 will encompass within its fold all the proceedings involving scrutiny inquiry investigation cancellation or suspension of registration audit inspection search and seizure assessment adjudication recovery etc. as well. It becomes imperative to note here that the first proviso to Section 98 (2) of the CGST Act 2017 discusses about any proceedings in the case of the applicant under any of the provisions of this Act . On the other hand Section 83(1) of the Act ibid talks about a situation viz. Where during the pendency of any proceedings under Section 62 or Section 63 or Section 64 or Section 67 or Section 73 or Section 74 the Commissioner is of the opinion It is quite clear from the above that the term proceeding referred to in Section 83 is restrictive in nature in as much as it gets related to Sections 62 / 63 / 64 / 67 / 73 / 74 only whereas the said term referred to in the first proviso to Section 98 (2) applies to any of the provision of this Act. It is further noticed that even in the case of Section 83 the proceedings under Section 62 63 and 64 all relate to assessment proceedings that precede the issue of any show cause notice. Accordingly it is opined that the dynamics of the instant case of the appellant is different and distinguishable from the case involving Radha Krishan Industries and thereby it does not come to their aid. While the application for advance ruling in the instant case was filed by the applicant online on 30.12.2022 the first summon issued by the Senior Intelligence Officer DGGI Chennai Zonal Unit is dated 30.11.2022 for appearance on 07.12.2022. It is seen that the date of issue of the second summon is 20.12.2022 for appearance on 09.01.2023. It is quite clear from the above that the initiation of proceedings by way of issue of both the summons that seeks the details/documents in relation to the issue involved in the instant case precedes the date of filing of advance ruling application by the applicant. Further the letter dated 19.12.2022 which also precedes the application of the appellant furnishing the details of fees collected unambiguously proves the case in point. An advance ruling is not required to be pronounced once an investigation is initiated against the appellant 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 and accordingly the application for advance ruling filed online on 30.12.2022 by the appellant is liable for rejection under the first proviso to Section 98 (2) of the CGST /TNGST Acts 2017. Conclusion - The AAR s decision to reject the advance ruling application upheld due to the ongoing investigation by the DGGI which constituted a proceeding under the CGST Act. Appeal dismissed.

ISSUES PRESENTED and CONSIDERED

The primary issue considered in this judgment was whether the application for advance ruling by the Tamil Nadu Medical Council (TNMC) regarding the applicability of GST on various fees collected by it could be admitted, given that an investigation by the Directorate General of GST Intelligence (DGGI) was already underway. Specifically, the core legal question was whether the issuance of summons under Section 70 of the CGST Act constituted a "proceeding" that would bar the admission of the advance ruling application under the first proviso to Section 98(2) of the CGST Act, 2017.

ISSUE-WISE DETAILED ANALYSIS

Legal Framework and Precedents

The relevant legal framework includes Section 98(2) of the CGST Act, which states that an application for advance ruling shall not be admitted if the question raised is already pending or decided in any proceedings under the Act. The term "proceedings" is not explicitly defined in the CGST Act, leading to differing interpretations.

The appellant relied on various judgments to argue that an investigation or inquiry does not constitute a "proceeding" under the Act. These included judgments from the Supreme Court and High Courts, such as Liberty Union Mills v. Union of India, Radha Krishna Industries v. State of Himachal Pradesh, and G.K. Trading Company v. Union of India, which distinguish between inquiries, investigations, and proceedings.

Court's Interpretation and Reasoning

The Tribunal examined the use of the term "proceedings" across different sections of the CGST Act and found that it is used in various contexts, often with prefixes like "judicial," "recovery," and "assessment," indicating a broader scope that includes inquiries and investigations. The Tribunal noted that Section 66, which deals with special audits, juxtaposes "inquiry" and "investigation" with "proceedings," suggesting that these are included within the term's ambit.

The Tribunal also considered the judgments of the High Courts of Telangana and Andhra Pradesh, which had differing views on whether an investigation constitutes a proceeding. The Tribunal found the Andhra Pradesh High Court's reasoning in the case of Master Minds more persuasive, which held that an investigation under Section 70 is a proceeding that bars the admission of an advance ruling application.

Key Evidence and Findings

The Tribunal noted that the first summons issued by the DGGI to TNMC was dated 30.11.2022, before the filing of the advance ruling application on 30.12.2022. The investigation involved the same issue as the advance ruling application, namely the GST applicability on fees collected by TNMC.

Application of Law to Facts

Applying the legal framework and precedents to the facts, the Tribunal concluded that the investigation initiated by the DGGI constituted a proceeding under the CGST Act. Since this proceeding was already underway before the advance ruling application was filed, the application could not be admitted under the first proviso to Section 98(2).

Treatment of Competing Arguments

The appellant's arguments, which relied on case law distinguishing "proceedings" from "investigations," were considered but ultimately dismissed. The Tribunal found these cases either distinguishable or not applicable to the GST context, which has a unique statutory framework. The Tribunal emphasized the broader interpretation of "proceedings" under the GST Act, as supported by the Andhra Pradesh High Court's decision.

Conclusions

The Tribunal concluded that the application for advance ruling was correctly rejected by the AAR, as the investigation by the DGGI constituted a pending proceeding under the CGST Act, barring the admission of the application.

SIGNIFICANT HOLDINGS

Core Principles Established

The Tribunal established that under the CGST Act, the term "proceedings" includes investigations and inquiries, not just formal adjudication processes. This interpretation aligns with the Act's broader statutory language and the need for a comprehensive understanding of the term in the GST context.

Final Determinations on Each Issue

The Tribunal upheld the AAR's decision to reject the advance ruling application due to the ongoing investigation by the DGGI, which constituted a proceeding under the CGST Act. The appeal was dismissed, affirming the AAR's ruling.

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