2025 (3) TMI 416 - AAAR - GST

Activity in relation to Panchayat or Municipality under Article 243 G or Article 243 W respectively of the Constitution of India - providing services of preparing and providing plans and estimate and preparing and providing DTP Draft Tender Plan for the building work provided by the assessee to the R B department Government of Gujarat under the contract - pure services or not - HELD THAT - A plain reading of the subsection (1) of the section 101 ibid depicts that the appellate authority may pass such order as it thinks fit by either confirming or modifying the ruling pronounced by the advance ruling authority. The wordings in section 101 of the CGST Act 2017 is almost similar to sections 35A of the Central Excise Act 1944 and 85(5) of the Finance Act 1994. To substantiate the aforementioned finding reliance placed on the judgement of the Hon ble Gujarat High Court in the case of Commissioner of Central Excise vs Medico Labs and Anr. 2004 (9) TMI 108 - HIGH COURT OF GUJARAT AT AHMEDABAD . This is more so because the jurisprudence developed over the years may be referred as pari materia while ascertaining the ambit and scope of the powers of the Appellate Authority for Advance Ruling. The impugned ruling dated 30.5.2024 is set aside and the matter is remanded back to the Authority for Advance Ruling (i.e. the GAAR) for fresh decision.

Summary

The Appellate Authority for Advance Ruling in Gujarat considered an appeal filed by M/s. Devendra Kantibhai Patel against an Advance Ruling. The appellant provides Works Contract Service (WCS) and engineering consultancy services to government agencies. The key issue was whether the services provided by the appellant qualified as activities in relation to Panchayat or Municipality under the Constitution of India and were eligible for exemption from Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST).The appellant sought Advance Ruling on whether their services of preparing plans and estimates for building work for the R&B department of the Government of Gujarat qualified as activities related to Panchayat or Municipality functions and were exempt from CGST and SGST. The Gujarat Authority for Advance Ruling (GAAR) found that the appellant failed to provide sufficient details of the buildings for which services were provided, leading to the conclusion that the appellant was not eligible for exemption.The appellant contended that their services fell within the functions entrusted to Panchayat and Municipality under the Constitution, meeting the conditions for exemption. They argued that the phrase 'activity in relation to any function' in the exemption notification should be interpreted broadly to include services provided to the government. They also cited relevant rulings to support their position.After a personal hearing, the Appellate Authority reviewed the appeal papers, submissions, and the impugned ruling. They noted that the GAAR ruling was based on insufficient information provided by the appellant. In light of this, the Authority decided to remand the matter back to the GAAR for a fresh decision, emphasizing the need for a thorough examination and consideration of all aspects of the case.The Authority invoked Section 101 of the CGST Act, which allows them to confirm or modify the ruling appealed against. They highlighted the importance of ensuring justice and referred to previous rulings where matters were remanded to the Advance Ruling Authority for further consideration. The decision to remand the case back to the GAAR was based on the principle of fairness and the need for a comprehensive review of the facts presented by the appellant.In conclusion, the Appellate Authority set aside the impugned ruling and directed the GAAR to reevaluate the case with all relevant information and provide a fresh decision after giving the appellant an opportunity to be heard. The decision was made in accordance with the principles of procedural fairness and the statutory provisions governing the appellate process in tax matters.