2024 (7) TMI 1445 - HC - GST

Scope of Advance Ruling application - Liability of recipient of good or services to pay tax on reverse charge basis - exemption under Serial No.18 of N/N.12/2007 Central Tax (Rate) - HELD THAT - Section 98 provides the procedure to be adopted on receipt of an application for advance ruling. Under sub section 2, the Authority after examining the application, record and providing opportunity of hearing to the applicant and the officer concerned, has to pass an order either admitting or rejecting the application. Proviso to Sub-Section 2 provides that the application for advance ruling shall not be admitted on the question raised, pending or decided in the case of the applicant under any of the provisions of the CGST Act. The petitioner, if not exempted by the notification is liable to pay tax on reverse charge basis. In other words, the liability to pay tax is of petitioner, inspite of being the recipient. The definition of advance ruling relied upon to oust the petitioner from making application, needs to be analyzed in the backdrop that the petitioner being liable to pay tax on reverse charge basis shall be covered under the definition of taxable person - A registered person or a person desirous of obtaining registration under the Act falls within ambit of the applicant in Section 95. It is compulsory for the petitioner to get registered, under Section 24 of CGST Act, being liable to pay tax on reverse charge basis. It cannot be lost sight that Section 95 starts with in this chapter, unless the context otherwise requires thereby leaving leverage for an interpretation to be given to the defined word in context it is being used. The matter needs consideration from another angle. Under Section 9(3) of the CGST Act, the Government on recommendation of the Council notifies the categories of goods or services or both, for payment of tax on reverse charge basis. It is stipulated that all provisions of the Act shall apply to the recipient of the goods or services or both, deeming to be the person liable to pay tax - the fiction under Section 9(3) of the CGST Act has to be given full play, by bringing the dealer liable to pay tax on reverse charge basis within the ambit of Chapter XVII for seeking Advance Ruling. The appeal against the Advance Ruling is provided under Section 100 of the CGST Act. The concerned Officer, the Jurisdictional Officer or the applicant can prefer an appeal against the ruling given under Section 98(4). No appeal is provided against rejection of the application under Section 98(2) of the CGST Act. The application of the petitioner was ousted at threshold under Section 98(2), as not maintainable. Section is unambiguous that appeal can be filed only against the orders pronounced under Section 98(4) of the CGST Act. The matter is remitted back to AAR for deciding the application afresh under Section 98(4) of the CGST Act - the impugned order is set aside - petition allowed by way of remand.

Summary

Issues involved:
1. Whether a recipient liable to pay tax on reverse charge basis can seek Advance Ruling?

Analysis:
The petitioner filed a petition seeking to quash an order by the Rajasthan Authority for Advance Ruling (AAR) under the Goods & Services Tax Act, 2017. The petitioner, engaged in the transmission of electricity, sought clarification on the exemption of transportation of goods under a specific notification. The AAR held that the application for advance ruling was not maintainable as the petitioner was not the supplier. The petitioner argued that there is no restriction in Sections 95 and 97 that the application can only be made by the supplier. The respondent contended that the petitioner was not covered under the definition of a supplier.

The key issue revolved around whether a recipient liable to pay tax on reverse charge basis can seek an Advance Ruling. The interpretation of relevant sections of the CGST Act was crucial. Section 97(1) allows any applicant to seek an advance ruling, and Section 97(2) specifies the issues for which a ruling can be sought, including the applicability of notifications. The definition of 'reverse charge,' 'supplier,' and 'taxable person' under Sections 2(98), 2(105), and 2(107) respectively was also significant.

The court analyzed the definitions and provisions of the CGST Act, emphasizing that a person liable to pay tax on reverse charge basis falls under the definition of a taxable person. The court noted that the AAR's interpretation of the definition of 'Advance Ruling' was flawed and highlighted the Supreme Court's stance on statutory definitions being subject to context. The court also considered the deeming fiction under Section 9(3) of the CGST Act, which treats recipients liable to pay tax on reverse charge as the person liable to pay tax.

Regarding the objection of alternative remedy, the court clarified that appeals against Advance Rulings are provided under Section 100, but no appeal is allowed against the rejection of an application under Section 98(2). As the petitioner's application was rejected under Section 98(2), the court set aside the impugned order and remitted the matter back to the AAR for reconsideration under Section 98(4) of the CGST Act. Ultimately, the writ petition was allowed, granting relief to the petitioner.