2025 (4) TMI 418 - AAR - GST

Scope of Advance Ruling application - Rate of GST - Whether the rate of GST reimbursable to M/s. Tata Projects Limited Mumbai shall be 5% as per the Bill of Entry or 12% considering that the overall contract falls within the definition of the Works Contract? - HELD THAT - From the statement of facts furnished by the applicant in their application and from the submissions made during the personal hearing it is understood that the determination of the liability to pay tax vests with the contractor M/s. Tata Projects Limited Mumbai in the instant case and not with the applicant. Therefore it becomes clear that in this case the assessment to tax does not relate to the applicant who happens to be the recipient of service only and the question raised in the application for advance ruling is about reimbursement of charges to the supplier of service. As the said question does not fit into any of the clauses at (a) to (g) of Section 97 (2) of the CGST Act 2017 thus no ruling could be pronounced in this regard. The applicant did not file any reply to the notice issued. A reminder dated 14.03.2025 reiterating the contents of the original notice was also issued to the applicant which was sent by RPAD and through email. However we bring to note that till date the taxpayer has not filed any reply to the notice and the reminder which were sent to them on 26.02.2025 and 14.03.2025 respectively. Hence it is construed that the applicant has no reason to file and in view of the same it is opined that no ruling could be pronounced in this case. Conclusion - No ruling is issued in this case as the question put forth by the applicant does not fall under the scope of Section 97(2) of the CGST/TNGST Acts 2017.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal question considered in this judgment is whether the rate of GST reimbursable to M/s. Tata Projects Limited, Mumbai, should be 5% as per the Bill of Entry or 12% considering that the overall contract falls within the definition of a Works Contract. The applicant sought an advance ruling to resolve this issue.

ISSUE-WISE DETAILED ANALYSIS

Relevant Legal Framework and Precedents

The legal framework relevant to this issue is primarily governed by the Central Goods and Services Tax Act, 2017, and the Tamil Nadu Goods and Services Tax Act, 2017. Specifically, Section 97(2) of the CGST Act outlines the scope of questions that can be addressed through an advance ruling, which includes classification of goods or services, applicability of a notification, determination of time and value of supply, admissibility of input tax credit, determination of tax liability, registration requirements, and whether a particular activity amounts to a supply of goods or services.

Court's Interpretation and Reasoning

The Tribunal interpreted the provisions of Section 97(2) and determined that the question raised by the applicant did not fall under any of the specified categories. The Tribunal emphasized that the determination of tax liability in this case pertains to the contractor, M/s. Tata Projects Limited, rather than the applicant, who is merely the recipient of the service. Therefore, the applicant's query about the reimbursement of charges to the supplier of service does not align with the categories outlined in Section 97(2).

Key Evidence and Findings

The applicant presented the contract details, sample invoices, and Bills of Entry to support their query. However, the Tribunal found that the applicant's role as a recipient of services did not grant them the standing to seek an advance ruling on the tax liability of the supplier, M/s. Tata Projects Limited.

Application of Law to Facts

The Tribunal applied the provisions of Section 97(2) and Section 95(a) of the CGST Act to the facts of the case. It concluded that the applicant, as a recipient of services, does not qualify to seek an advance ruling regarding the supplier's tax liability, as the advance ruling mechanism is intended for suppliers or those proposing to undertake supply.

Treatment of Competing Arguments

The Tribunal considered the applicant's argument that the overall contract falls within the definition of a Works Contract, which typically attracts a 12% GST rate. However, the Tribunal maintained that the applicant's role as a recipient precluded them from seeking a ruling on the supplier's tax obligations.

Conclusions

The Tribunal concluded that no ruling could be issued, as the applicant's question did not fit within the scope of Section 97(2) of the CGST/TNGST Acts, 2017. The applicant's failure to respond to the Tribunal's notices further reinforced the decision not to issue a ruling.

SIGNIFICANT HOLDINGS

The Tribunal held that the advance ruling mechanism is not available to recipients of services seeking clarification on the supplier's tax liability. This principle is based on the interpretation of Section 97(2) and Section 95(a) of the CGST Act, which limits the scope of advance rulings to suppliers or those proposing to supply goods or services.

Preserve Verbatim Quotes of Crucial Legal Reasoning

"As the said question does not fit into any of the clauses at (a) to (g) of Section 97 (2) of the CGST Act, 2017, as enumerated above, we are of the considered opinion that no ruling could be pronounced in this regard."

Core Principles Established

The ruling establishes that the advance ruling process is intended for suppliers or those proposing to supply goods or services, and not for recipients seeking clarification on reimbursement or tax liability issues related to the supplier.

Final Determinations on Each Issue

The Tribunal determined that no ruling could be issued in this case, as the applicant's query did not fall within the permissible scope of Section 97(2) of the CGST/TNGST Acts, 2017.