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2019 (12) TMI 50 - AAAR - GSTRejection of application for advance ruling on the ground that proceedings are already pending before the revenue authorities - Principles of Natural Justice - Classification of goods - Chewing Tobacco - applicability of N/N. 01/2017-Compensation Cess-(Rate) - whether, the rejection of the application filed by the Appellant seeking Advance Ruling by the Lower Authority is as per the provisions of Law and Principles of Natural Justice? HELD THAT - It is seen that the revenue has not represented before the lower authority at the time of hearing. The lower authority has heard the case of the appellant. But subsequently, the CGST officers of Trichy commissionerate has responded to the information sought on the application of the appellant, wherein it is stated that a summon was issued on 8th Jan 2019 and Statement recorded on 9th Jan on the issue of short payment of compensation cess by misclassifying the product supplied by the appellant. On receipt of the said comments, the lower authority, without extending another opportunity to the appellant to hear their contentions on the comments of the jurisdictional authority has rejected the applicant stating that the application is filed when the proceedings are pending before the GST authorities. The appellant is aggrieved of the said decision and considers that the principles of natural justice is not followed in as much as they have not been extended an opportunity to comment on the submissions of the CGST authorities that the question raised in the application was already pending with the department - the-justice be met by remanding the case to the lower authority, to extend an opportunity to the appellant and then decide the case as per the provisions of law. We further find that this authority is empowered vide section 101(1) to Pass such order as deemed fit. The matter is remanded to the lower authority for consideration and passing of appropriate orders on whether the issue raised in the application by the appellant was already pending before the department after extending opportunity to the appellant - appeal allowed by way of remand.
Issues Involved
1. Classification of the product "Chewing Tobacco" and applicability of Notification No.01/2017-Compensation Cess-(Rate). 2. Rejection of the application by the Lower Authority under Section 98(2) of the CGST/TNGST Act 2017. 3. Alleged violation of principles of natural justice. Detailed Analysis Classification of the Product "Chewing Tobacco" and Applicability of Notification No.01/2017-Compensation Cess-(Rate) The appellant, a manufacturer of tobacco products under the brand "Nizam Lady," sought an advance ruling on the classification of their product "Chewing Tobacco" and the applicability of Notification No.01/2017-Compensation Cess-(Rate). The Original Authority for Advance Ruling rejected the application under the first proviso to Section 98(2) of the CGST/TNGST Act 2017, citing that the issue was already pending before the appropriate authority. Rejection of the Application by the Lower Authority under Section 98(2) of the CGST/TNGST Act 2017 The Lower Authority rejected the application based on comments from the Commissioner GST & Central Excise, Trichy, which indicated that proceedings related to the appellant's issue had already been initiated and an offense case booked. The appellant argued that their application was accepted initially, and during the personal hearing on 22nd May 2019, the Lower Authority was satisfied that there were no pending issues. However, the application was later rejected due to the pending proceedings. The appellant contended that the rejection was based on the comments received from the CGST officers post-hearing, without giving them an opportunity to respond, which they claimed was contrary to Section 98(2) of the Act. Alleged Violation of Principles of Natural Justice The appellant argued that the rejection of their application without a hearing on the matter of pending proceedings violated the principles of natural justice. They claimed that the summons issued by the jurisdictional authority were related to the short payment of GST and GST Compensation Cess and not the classification of the product. They also pointed out that the jurisdictional authority did not raise objections during the personal hearing before the Lower Authority. Personal Hearing and Submissions During the personal hearing on 10.10.2019 before the Appellate Authority, the appellant's representatives contended that the issue of pending proceedings was not discussed during the hearing before the Lower Authority. They requested the matter be remanded for reconsideration. The appellant submitted that the initiation of inquiry under Section 70 of the CGST Act by the jurisdictional authority was unrelated to the application for advance ruling. They argued that the term "proceedings" in Section 98(2) is vague and lacks clarity regarding the stage at which a matter is deemed pending. They cited cases where applications were rejected at the admission stage with proper judicial proceedings, which they claimed were not followed in their case. Discussions and Ruling The Appellate Authority considered the submissions and statutory provisions. It found that the Lower Authority had not extended an opportunity to the appellant to comment on the jurisdictional authority's submissions, thus violating the principles of natural justice. The Appellate Authority decided to remand the case to the Lower Authority to extend an opportunity to the appellant and then decide the case as per the provisions of law. Final Ruling The order No. 37/AAR/2019 dated 27.08.2019 passed by the Lower Authority was set aside. The matter was remanded to the Lower Authority for reconsideration and passing of appropriate orders on whether the issue raised in the application by the appellant was already pending before the department, after extending an opportunity to the appellant.
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