2022 (3) TMI 1151 - AAAR - GST

Maintainability of application - Section 98 (2) of the CGST/GGST Act 2017 - Exemption from GST - Works Contract - Supply made by M/s INI Studio as Service in relation to any functions entrusted to a municipality under article 243W of the Constitution - Pure services or not - exemption under Entry No. 3 of the Notification No. 12/2017-CT - recipient of services or not - HELD THAT - As per Section 95 of the CGST Act 2017 the term Advance Ruling means a decision provided by the authority or appellate authority to an applicant on matters or questions specified in subsection 2 of Section 97 or subsection 1 of Section 100 in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. From the submission of appellant it is amply clear that the service i.e. Design and Comprehensive Consultancy is to be provided by M/s INI Design Studio Pvt Ltd to the Appellant - appellant is the recipient of service in the subject case. The impugned transaction are not in relation to the supply of goods or services or both undertaken or proposed to be undertaken by the appellant and therefore we are of the view that it is outside the purview of mandate given to the Advance Ruling Authority/ Appellate Authority on Advance Ruling. The provisions of Section 103 states that the ruling pronounced is binding only on the applicant. It is amply clears that if a recipient of supply obtains a ruling on the taxability of his inward supply of goods or services or both the supplier of such goods or services or both is not bound by that ruling and he is free to assess the supply according to his own determination/understanding of law and hence ruling loses its relevance and applicability - Any provision of law has to be interpreted in a constructive and harmonious way keeping in mind the object of the purpose of the provision. Any interpretation if it defeats the vary purpose of the provision of law is not only incorrect but also improper and bad in law. The present appeal is non-maintainable.

Summary

Issues involved:
1. Maintainability of the appeal under Section 98(2) of the CGST/GGST Act, 2017.
2. Interpretation of the term "applicant" under Section 95(c) of the CGST Act, 2017.
3. Determination of liability to pay tax on services provided by M/s INI Studio.
4. Application of exemption under Entry No. 3 of Notification No. 12/2017-CT to services provided to a municipality under Article 243W of the Constitution.

Analysis:
1. The main issue was the maintainability of the appeal under Section 98(2) of the CGST/GGST Act, 2017. The Appellate Authority for Advance Ruling observed that the appellant sought a ruling on inward supply, but the ruling was on the liability to pay tax on services supplied to them, not on the supplies made by them. The ruling was binding only on the applicant, and the supplier was not bound by it. The appellant's interpretation of the term "applicant" under Section 95(c) was deemed incorrect, leading to the rejection of the appeal as non-maintainable.

2. The interpretation of the term "applicant" under Section 95(c) of the CGST Act, 2017 was crucial. The appellant argued that as a registered entity seeking a ruling on inward supply, they were eligible to apply. However, the Appellate Authority clarified that the applicant should be a person registered or desirous of obtaining registration under the Act. The ruling was specific to the recipient of the supply, and the supplier was not bound by it, emphasizing the importance of correct interpretation of legal provisions.

3. The determination of liability to pay tax on services provided by M/s INI Studio was a key aspect. The appellant contended that the services received were exempt under Entry No. 3 of Notification No. 12/2017-CT as "Pure Services" in relation to functions entrusted to a municipality under Article 243W of the Constitution. However, the Appellate Authority rejected the appeal on grounds of non-maintainability, focusing on the nature of the ruling sought and the applicability of the exemption.

4. The application of exemption under Entry No. 3 of Notification No. 12/2017-CT to services provided to a municipality under Article 243W of the Constitution was a significant issue. The appellant argued that the services for a state-of-the-art office building were in relation to duties under the GPMC Act and Article 243W, thus qualifying for exemption. The appellant emphasized the broad interpretation of "in relation to" and cited relevant case laws to support their position. However, the appeal was rejected based on the maintainability issue, and the original ruling by the Gujarat Authority for Advance Ruling was upheld.

In conclusion, the judgment focused on the correct interpretation of legal provisions, the scope of rulings by the Advance Ruling Authority, and the specific nature of the appeal in relation to liability for tax on services provided. The rejection of the appeal was primarily based on the non-maintainability under the CGST Act, emphasizing the importance of clarity and adherence to statutory requirements in seeking advance rulings.