2019 (11) TMI 1329 - AAR - GST

Scope of Advance Ruling application - Sub-section (a) of section 95 of the HPGST/CGST Act - HELD THAT - Since the applicant is neither supplier of ENA nor he proposes to undertake supply of ENA, therefore the application for advance ruling is not admitted.

Summary

Issues:
1. Whether the applicant is eligible for an advance ruling on the issue of charging VAT/CST or GST on ENA used in the manufacture of homeopathic formulations.
2. Whether the applicant's academic interest in the issue of entering into the business of manufacturing and supplying ENA makes them eligible for an advance ruling.

Analysis:

Issue 1:
The applicant, engaged in manufacturing homeopathic formulations, sought an advance ruling regarding the inconsistency in suppliers charging VAT/CST or GST on ENA used in the manufacturing process. During the personal hearing, it was highlighted that the lack of clarity among suppliers regarding the tax treatment of ENA posed a challenge for the applicant. However, it was noted that the applicant was not presently involved in the manufacture and supply of ENA. The representatives were questioned on the necessity of seeking a ruling on an issue that did not directly impact the applicant's current operations. Despite the explanation that the applicant intended to venture into ENA production in the future, the absence of supporting documents regarding this proposed business activity raised doubts about the seriousness of the intention.

Issue 2:
The definition of advance ruling under sub-section (a) of section 95 of the HPGST/CGST Act specifies that it pertains to matters related to goods or services being undertaken or proposed by the applicant. Since the applicant neither currently supplies ENA nor has concrete plans or documentation to support the future business of ENA production, the Authority concluded that the application for advance ruling could not be admitted. The lack of evidence regarding obtaining the necessary licenses under the Himachal Pradesh Excise Act, 2011, further reinforced the view that the applicant's interest in the issue was primarily academic. The ruling emphasized that advance rulings are binding only on the taxpayers who seek them, and in this case, the absence of a direct connection between the issue and the applicant's current or proposed business activities rendered the application ineligible for consideration.

This judgment underscores the importance of a direct nexus between the subject matter of an advance ruling application and the actual or intended business operations of the applicant. It highlights the need for concrete evidence and documentation to support claims regarding future business activities when seeking clarity on tax-related matters.