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2021 (9) TMI 1062 - AAR - GSTSeeking advance ruling by misrepresenting the facts - Classification of goods - Rate of SGST and CGST - Papad of different shapes and sizes - HELD THAT - T h e DGGI initiated the Summons proceedings under section 70(1) CGST Act against the applicant, prior to the subject GST-ARA 01 Application filed. Section 70(2) of CGST Act, 2017 has deeming provision that, every such inquiry referred to in sub-section (1) shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code. Thereby we hold that subject inquiry initiated under Section 70(1) of the CGST Act 2017 by the DGGI on the applicant is a judicial proceeding. The applicant has mis-declared at said Sr No 17 of subject GST ARA-01 Application form and further suppressed this material fact, despite being specifically enquired by us during the hearing on 30-6-21 wherein the authorised representatives of the applicant submitted that no investigation has been initiated by the DGGI, Surat on the applicant - the Advance Ruling cannot be used as a mechanism to nullify and frustrate the inquiry proceedings already initiated vide section 70(1) of CGST Act. The applicant should bear in mind that the CGST Act has deemed this Authority to be a civil court for the purposes of section 195, but not for the purposes of Chapter XXVI of the Code of Criminal Procedure, 1973, and every proceeding before the Authority shall be deemed to be judicial proceeding within the meaning of sections 193 and 228, and for the purpose of section 196 of the Indian Penal Code - no Ruling has been pronounced by the Authority with regard to the subject application but for the said interim Admission order. The application is hereby rejected as non-maintainable and inadmissible.
Issues:
1. Classification of goods 'Papad' of different shapes and sizes. 2. Applicable rate of SGST and CGST on the supply of such 'Papad'. Classification of Goods: The applicant, a supplier of 'Papad' of varying shapes and sizes, sought an advance ruling on the tariff heading for classification and the corresponding SGST and CGST rates. The Directorate General of Goods & Services Tax Intelligence (DGGI) initiated an investigation against the applicant for alleged misclassification of goods as 'fryums' under a different HSN code, evading GST payments. The investigation involved search operations and summon proceedings against the applicant and related entities. Despite the applicant's denial of any ongoing proceedings, the Authority found that the applicant had suppressed material facts regarding the DGGI inquiry. The Authority held that the applicant's misdeclaration and suppression of facts undermined the integrity of the advance ruling process and frustrated the ongoing investigation, leading to the rejection of the application as non-maintainable and inadmissible. Applicable SGST and CGST Rates: During the personal hearing, it was revealed that the applicant had not disclosed the DGGI investigation initiated before the filing of the advance ruling application. The Authority noted that the inquiry under Section 70(1) of the CGST Act against the applicant constituted a judicial proceeding. The applicant's failure to disclose this crucial information, despite specific inquiries during the hearing, was deemed as an attempt to misuse the advance ruling mechanism to impede the ongoing investigation. The Authority emphasized that the advance ruling process should not be used to circumvent or obstruct existing legal proceedings. Therefore, considering the applicant's deliberate suppression of material facts and contravention of Section 98(2) of the CGST Act, the application was rejected as non-maintainable and inadmissible. In conclusion, the Authority's decision was based on the applicant's failure to disclose the ongoing DGGI investigation, which was directly related to the subject matter of the advance ruling application. The deliberate suppression of material facts and attempt to obtain a ruling while withholding crucial information led to the rejection of the application. The Authority highlighted the importance of transparency and integrity in the advance ruling process, emphasizing that it should not be misused to interfere with or undermine existing legal proceedings.
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