9911796707
TMI Blog2019 (11) TMI 397X X X X Extracts X X X X X X X X Extracts X X X X ..... C. The investigations proceedings were approved on 15.01.2019 and the search was conducted on 5.2.2019. The statement of the Director of KOTI u/s 70 was recorded on 5.2.2019, and the statement of M/s Srinivas Kamath (Wholetime Director of KOTI) was recorded on 11.2.2019. The application for advance ruling was filed on 25.2.2019 by the applicant respondent at the behest of KOTI. It becomes clear from the above that there was a deliberate intention on the part of KOTI as well as its applicant-respondent to obtain a decision clandestinely without revealing the issue of investigation being initiated against KOTI on the very same issue that was raised before the ARA. It cannot be a mere coincidence that the applicant-respondent made an application for advance ruling on 25.2.2019 immediately following the initiation of proceedings against KOTI on 5.2.2019. Having seen the sort of control exercised on the operations of the applicant-respondent by KOTI, it also is apparent that applicant-respondent was aware of the DGGI proceedings against KOTI and therefore it filed an application and moreover, kept the fact away from the advance ruling authority. This amounts to nothing but suppres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y are inter-alia engaged in the business of reselling of Ice Cream from its Ice cream parlour situated in Aurangabad. They are supplied with the said goods from its sole manufacturer, M/s. Kamaths Ourtimes Icecreams Pvt Ltd ( The Franchisor ). They exclusively deal in the Naturals brand Ice cream manufactured by the franchisor . M/s Arihant Enterprises had made an application GST-ARA, Application No. 126 dated 25.02.2019 for advance ruling before the Maharashtra Authority for Advance Ruling, GST Bhavan, 8th floor, Fl-Wing, Mazgaon Mumbai-400010 on the issue of whether the supply of Ice Cream made by it from its retail outlet would be treated as supply of goods or supply of service or a composite supply . In this context, after due consideration of various submissions made before it, The Hon ble Maharashtra Authority For Advance Ruling issued an order of Advance Ruling No. GST-ARA-126/2018-19/B-29 dated 19.03.2019 = 2019 (4) TMI 808 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA , wherein, it is inter-alia held that the supply of ice cream by the applicant from its retail outlets would be treated as supply of goods . Aggrieved by the said Order of the AAR, the present Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re than ₹ 40.00 Crs on two aspects (a) by way of misclassifying their activity as supply of goods under HSN 2105 instead of its correct classification as supply of service under SAC 9963 (b) Suppression of supplies made and GST evaded thereon, that accordingly, investigations to detect cases of evasion of GST by franchisees of M/s KOTI located all over India, including M/s Arihant Enterprises, Aurangabad having its registered office in Pune were in progress covering one by one. 3. That in the meantime, based on an application dated 25.02.2019 for Advance Ruling, made by M/s Arihant Enterprises, the Hon ble Maharashtra Authority For Advance Ruling issued an order of Advance Ruling No. GST-ARA-126/2018-19/B-29 dated 19.03.2019 = 2019 (4) TMI 808 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA , wherein, it is inter-alia held that the supply of ice cream by the applicant from its retail outlets would be treated as supply of goods . That since, the Directorate General of GST Intelligence, Pune Zonal Unit, Pune was not a party to the application filed before the Authority for Advance Ruling, it had no knowledge of these proceedings and the order of advance ruling was also n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is reproduced herein under for ready reference. A para from Statement dated 10.05.2019 of Mr Virendra Mehta; On being asked about the application dated 25.02.2019 made by M/s Arihant Enterprises before Advance Ruling Authority, I undertake to produce the same by 13.05.2019. In the light of franchisee agreement with KOTI and with due consideration to its terms and conditions, classification of the product and taxation thereon is decided by KOTI, the franchisor, by way of supplying the spectrum software for billing to your firm, which is mandatorily to be used by each franchisee, under these circumstances on being asked as to how M/s Arihant Enterprises had filed an application for advance ruling on its own, I state that with due oral discussion with directors of KOTI, it was taken decision to file an application before Advance Ruling Authority through a common legal consultant, Mr. Chirag Mehta for taking an advance ruling as to whether serving of ice cream at parlour end is a supply of service classifiable under SAC 9963 or resale of goods (ice cream) under HSN 2105, since this issue of classification was already taken up by DGGSTI, Pune Zonal Unit by initiating inquiry a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of the major competitors in the field such as ice cream brands under trade names Gelato , Baskin Robbins , Cafe Chokolade etc have rightly classified their activity of serving of Ice Cream at parlour ends as supply of services under HSN Code 996331 of the GST tariff of India and they have paid [email protected]% and [email protected]% or IGST @5% as the case may be, w.e.f. 15.11.2017 by following the amending Notification No. 46/2017-Central Tax (Rate) dated 14.11.2017. An explanation to Notification No. 46/2017-Central Tax (Rate) dated 14.11.2017 reads as under: For the removal of doubt, it is hereby clarified that, supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or drink, where such supply or service is for cash, deferred payment or other valuable consideration, provided by restaurant, eating joints including mess, canteen, whether for consumption on or away from the premises where such food or any other article for human consumption or drink is supplied, other than those located in the premises of hotels, inns, guest houses, clubs, campuses or other commercial places meant for residen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcess from the customers but not being deposited in to government account which is not legal and is liable to be recovered 9. In view of above legal position, it appears that the activity of ice cream parlours of the franchisees of M/s KOTI are covered under the explanation to the said notification which categorically classify the same as service under SAC 9963 and shall attract Central Tax @ 2.5% without any Input Tax Credit. Accordingly, the subject Order of Advance Ruling appears to be not just and proper as it can t sustain on merits. 10. As per Longman Dictionary - what is ice cream parlour : a restaurant that only sells ice cream . As per Wikipedia- Ice cream parlours are restaurants that sell ice cream . 11. The ratio of the Advance Ruling No. KAR ADRG 21/2018 dated 21st August, 2018 = 2018 (9) TMI 1042 - AUTHORITY FOR ADVANCE RULINGS, KARNATAKA given in the case of M/s Coffee Day Global Limited , 23/2, 6th Floor, Vittal Mallya Road, Bangalore-560001 appears worth consideration in the facts and circumstances of the subject case. 12. The ratio of Advance Ruling by Authority of Advance Ruling under GST Madhya Pradesh in the case of JABALP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ace other than his own but including a place provided by way of tenancy or otherwise by the person receiving such service . On considering the common parlance meaning of Outdoor Catering and its above definition for Service Tax, we come to the conclusion that the supply of food, soft drinks and snacks sold in the Food Court or Snack Bar of the Applicant cannot by any stretch of imagination, be treated as a part of outdoor catering. In view of the facts and circumstances, we are of the view that the services provided by the Applicant in Snack Bar would be classifiable under SAC 9963 and chargeable to GST @ 5% (CGST @ 2.5% + SGST @ 2.5%), provided they fulfil the conditions laid down under Notification No. 46/2017-Central Tax (Rate) and corresponding notifications issued under MGST Act, 2017. 13. The subject case is not simply an act of resale of ice cream purchased from KOTI. The transactions between KOTI and M/s Arihant Enterprises are governed by the franchise agreement agreed between them. No franchise fees is charged separately. No sales promotion expenses, advertisement expenses, infra structure and business support etc provided to KOTI are reimbursed separately to Ari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e franchisor to the retail ice cream parlours under the KOTI scheme of franchise agreement so as to sell/serve finally to unrelated buyers on behalf of KOTI. It is therefore pertinent to note that the various supply services offered by the franchisees to the franchisor and various fees payable by the franchisor to franchisee applicant thereon is adjusted along with the franchise fees not collected by the franchisor but hidden under the scheme of things, in the final sale price of Ice cream so fixed by the franchisor. The entire activities of franchisee applicant are therefore to be considered as supply of service. It therefore follows that the applicant s contention that its activity is merely a resale of Ice Cream / supply of goods and not a supply of service is incorrect and not acceptable and accordingly the subject order of ARA upholding the views of the applicant is liable to be rejected as it is not tenable. 16. The Appellant places reliance in this context on the observations made by the Honourable High Court of Delhi in the case of MC DONALDS INDIA PVT. LTD. Versus COMMR. OF TRADE TAXES, NEW DELHI [2017(5) G.S.T.L 120 DEL] = 2017 (5) TMI 999 - DELHI HIGH COURT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice Tax. Air India Building, Nariman Point, Mumbai-400 021 for justice and equity. (iv) that the facts and circumstances elucidated in the present appeal involve the question of substantial justice , where gross delay of 25 days only, deserves to be condoned in the overall interest of justice. On the other hand, if condoning the delay being denied it would seriously undermine the cause of justice, resulting into miscarriage of justice for the appellant. 18. Thus, in view of the above grounds of appeal and the grounds mentioned in the application for the condonation of the delay in filing of the appeal under consideration, it was prayed by the Appellant:- (i) that the delay in filing of appeal may be condoned; (ii) that the appeal may be allowed and the order of advance ruling Order No. GST-ARA-126/2018-19/B-29 dated 19.03.2019 = 2019 (4) TMI 808 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA received by this office on 16.04.2019 may be set aside; (iii) Any other order as deemed fit. Respondent s submissions 19. The Respondent submitted that the present appeal filed by the Department is not maintainable, void and bad in law. Accordingly, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of party packs or popularly Known as Tubs . These are packed in plastic containers bearing the details of product including maximum retail price (MRP) of the product. The details of the product are printed on the packs in accordance with the provisions of the Legal Metrology Act, 2009. A pictorial representation of the pack is reproduced here under: india 25.2 Sale of ice-cream by way-of-scoops: Under this method, the ice-cream scoops are sold to the customers who wish to consume Ice-creams on a take-away basis. The franchisor supplies Ice-creams to the respondent in a wholesale pack to sell the same in scoops. These wholesale packs are emptied in steel containers at the outlet. Thereafter, the ice-creams are sold over the counter and supplied in scoops in paper cups, regular cones or waffle cones. Further, at times the customer prefers more than one flavour of ice cream in different combinations commonly known as Double Scoop or (Triple Scoop . Accordingly, the ice creams are supplied in large cones or cups. In some cases, the ice cream is melted (semi-liquid form) and sold in paper cups to the customer based on their demand. In such cases, only the form change ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ice cream by the respondent. 27. The respondent was not sure about the applicability of the rate of GST on the said sale in as much as the industry was divided on the said issue. In order to avoid any controversy and litigation in future, the respondent has filed an application before the Advance Ruling Authority, Mumbai vide Application No. 126 on 25.02.2019. 28. The said application was filed for seeking advance ruling in following questions:- a) Whether supply of ice-cream by the respondent from its retail outlets would be treated as supply of goods or supply of service or a composite supply and subject to GST accordingly. b) Whether the supply, not being a composite supply, would be treated as supply of service in terms of entry 6(b) of Schedule II, attached to the CGST Act, 2017 and leviable to CGST @ 2.5% in terms of Notification No.11/2017 as amended by Notification No.46/2017-Central Tax (Rate) (serial no.(i), entry no. 7) of the notification. c) In case the supply is held to be composite supply , whether the taxability of the same should be treated as supply of service in terms of entry 6(b) of the Schedule II to the CGST act, 2017, or sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he newly rolled out GST law also caused a delay in filing the present appeal. 32.2 The respondent submits that the above reasoning of the appellant-department is vague and absurd for the reasons stated infra. (i) First, Section 100 of the CGST Act, 2017 speaks about the filing of appeal to Appellate Authority formed under section 99 of the CGST, 2017.- 99. Appellate Authority for Advance Ruling - Subject to the provisions of this Chapter, for the purposes of this Act, the Appellate Authority for Advance Ruling constituted under the provisions of a State Goods and Services Tax Act or a Union Territory Goods and Services Tax Act shall be deemed to be the Appellate Authority in respect of that State or Union territory. 100. Appeal to Appellate Authority- The concerned officer, the jurisdictional officer or an applicant aggrieved by any advance ruling pronounced under sub-section (4) of section 98, may appeal to the Appellate Authority. (1) Every appeal under this section shall be filed within a period of thirty days from the date on which the ruling sought to be appealed against is communicated to the concerned officer, the jurisdictional officer a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, while assuring that the purpose of enacting such a law does not stand frustrated. The party should show that besides acting bona fide, it had taken all possible steps within its power and control and had approached the Court without any unnecessary delay. The test is whether or not a cause is sufficient to see whether it could have been avoided by the party by the exercise of due care and attention. (iv) Delay is just one of the ingredients which has to be considered by the Court. In addition to this, the Court must also take into account the conduct of the parties, bona fide reasons for condonation of delay and whether such delay could easily be avoided by the appellant acting with normal care and caution. The statutory provisions mandate that applications for condonation of delay and applications belatedly filed beyond the prescribed period of limitation for bringing the legal representatives on record should be rejected unless sufficient cause is shown for condonation of delay. It is the requirement of law that these applications cannot be allowed as a matter of right and even in a routine manner. (v) As regards the merits of the application in hand, except for a vague ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... including the Government. 13. In our view, it is the right time to inform oil the government bodies, their agencies and instrumentalities that unless they have reasonable and acceptable explanation for the delay and there was bona fide effort, there is no need to accept the usual explanation that the file was kept pending for several months/years due to considerable degree of procedural red-tape in the process. The government departments are under a special obligation to ensure that they perform their duties with diligence and commitment. Condonation of delay is an exception and should not be used as an anticipated benefit for government departments. The law shelters everyone under the same light and should not be swirled for the benefit of a few. Considering the fact that there was no proper explanation offered by the Department for the delay except mentioning of various dates, according to us, the Department has miserably failed to give any acceptable and cogent reasons sufficient to condone such a huge delay. Accordingly, the appeals are liable to be dismissed on the ground of delay. (vii) Third, the Goods and Services Tax has been introduced with effect from01.07.2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that the department referred to letter F. No.DGI/PZU/Gr C /AAR -Arihant/40/2019 dated 14.05.2019 and 17.05.2019 written by the DGGI to the appellant. Copies of the said letters have not been provided to the respondent, if the same have been referred to in the grounds of appeal, copies of the same should have been enclosed, failure to do so, vitiates the proceedings. It is not known what are the contents of the said letters and why and how the DGGI is directing the department to file the present appeal. What interest has the DGGI got in the present appeal? Under which provision of law and under which authority, the DGGI is communicating with the appellant. Under which capacity, the DGGI (being an investigating body) is influencing the decision-making process. The present appeal is motivated and lacks bonafide. Hence, on this count alone, the present appeal is liable to be rejected. (iii) Apart from the above, it is pertinent to look into Section 104 of the act which reads as under:- 104. Advance ruling too be void in certain circumstances,- (1) Where the Authority or the Appellate Authority finds that advance ruling pronounced by it under sub-section (4) of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of facts, then the provisions of section 104 would become redundant or otiose. There would be no meaning of section 104 as every such point can be raised in appeal. Such an interpretation would be absurd and hence, needs to be avoided. (vi) The legislature is a perfect legislative body. It is presumed to know all the laws when it enacts any particular legislation. In Union of India VS.Hansoli Devi reported at (2002) 7 SCC 273 = 2002 (9) TMI 799 - SUPREME COURT , the Hon ble Supreme Court has observed that the legislature never wastes it words or say anything in vain and a construction which attributes redundancy to legislation will not be accepted except for compelling reasons. (vii) In Sultana Begum Vs. Prem Chand Jain reported at (1997) SCC 373 = 1996 (12) TMI 388 - SUPREME COURT , at page 381, the Hon ble Apex Court has held as under:- ........................ 15. On a conspectus of the case-low indicated above, the following principles are clearly discernible: (1) lt is the duty of the courts to avoid the head-on clash between two sections of the act and to construe the provisions which appear to be in conflict with each other in such a manne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he skin and miss the soul words, phrases and rules occurring in a statute are to be read together and not in an isolated manner. The legislation never intends to give one from one hand and take away from other hand. Hence, the present appeal is not maintainable and deserves to be dismissed, in lamina. (x) There is yet another reason which supports the above submission of the respondent. The above provision section 104 would be applicable only in case where the applicant (assessee) is the appellant. The appellate authority would pass an order on the appeal of the appellant (assessee). Such an order can berecalled if the appellant (assessee) is guilty of fraud, suppression of material facts or misrepresentation of facts, It cannot be gainsaid that the revenue would be guilty of fraud, suppression of material facts or misrepresentation of facts. (xi) If the DGGI was so convincing, they could have convinced the Authority for Advance ruling to recall its order and hold that the same is void, by moving an appropriate application before it, in terms of section 104 of the act ibid. Having failed to do so, the present appeal is a back door entry. It should not be permitted to be enter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs are pending in the name of the applicant, in the present appeal, it is the respondent . The movie story that the investigations were initiated against the franchisor and hence, the respondent has no reason to approach the advance ruling authority for advance ruling, is without any basis. Such contention of the appellant-department is vague and absurd. It needs to be stated only to be rejected. (vi) Even otherwise, it is immaterial, in law as well as in the facts and circumstances of the present case, whether there is any proceeding pending in the name of the franchisor or other franchisees. As per law, the provisions of Chapter XVII would be applicable only qua the applicant . The term applicant has been defined statutorily under section 95(c) of the Act as any person registered or desirous of obtaining registration under this Act. The ruling and other provisions would be applicable and enforceable only qua such an applicant. Hence, reference to investigation pending against the franchisor or other persons or the tax being paid by the competitors is wholly irrelevant to the issue at hand and clearly an attempt to mislead and misguide this Appellate authority. Hence, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpugned order came to be passed. Hence, the said statement has been recorded, under duress, force, coercion and threat, in order to support the DGGI s version. A copy of the said statement has not been provided to Shri Virendra Nand Kumar. No opportunity of allowing the maker thereof to retract the said statement has been granted. The said statement has not been tested on oath. No cross examination of shri Virendra Nand Kumar has been granted. Hence, as such, no reliance can be placed on the said statement. (x) In Basudev Garg Vs. Commissioner of Customs - 2013 (294) ELT 353 (Del.) = 2013 (5) TMI 350 - DELHI HIGH COURT , the Division Bench of Delhi High Court has held that the statement against the assessee cannot be used without giving them opportunity of cross examination. A statement needs to be tested on oath before being led in as evidence. In absence of the same, such statement cannot be relied upon. (xi) To similar effect is judgment of the Hon ble Punjab and Haryana High Court in the case of Jindal Drugs Private Limited v/s Union of India 2016 (340) ELT 67 (P H) = 2016 (6) TMI 956 - PUNJAB HARYANA HIGH COURT . (xii) Without prejudice to the above, relia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present appeal, the appellant-department contends that some of the major competitors in the field such as ice-creams brands under trade names Gelato , Baskin Robbins , Cafe Chokolade etc. have rightly classified their activity of serving of Ice-cream at parlour end as supply of services under the HSN code 996331 of the GST tariff of India and they have paid CGST @2.5% and SGST @ 2.5% or the IGST @ 5%, as the case may be, w.e.f. 15.11.2017 by following amending Notification No. 46/2017-C.T. (Rate) dated 14.11.2017. (xviii) The respondent submits that the above grounds taken by the appellant-department are absurd and incongruous. What is being done by other suppliers is not a basis to decide the present appeal. The present appeal needs to be decided on the facts of the present case. It is not known as to what is the activity being undertaken by the so called competitors and the tax treatment being undertaken by them. There is no evidence of the same produced on record by the department. No notice has been issued to the said competitors. Hence, a bald statement cannot be accepted. Therefore, the present appeal is liable to be rejected on this count alone. (xix) Even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted by the department in their response/report filed before the Authority for Advance ruling. Hence, it is clear that the above factual position has been typed by the DGGI officials and provided to the appellant department. The appellant department never disputed facts. An appeal is not provided under Chapter XVII to dispute the factual position. If that be the case, the appellant department should have stated so in the report itself. The entire report of the department is in agreement with the facts stated in the application and the submissions of the applicant (respondent herein). It is a complete summersault, now, in the present appeal. The department needs to be reminded that it is not a case of assessment proceedings. It appears that the appellant department has donned the cap of an assessing officer while drafting the grounds of appeal, which is, part from being bad in law, not permissible. An appeal can be urged on the questions decided by the authority and not to argue on facts. This case is a classic case of abuse of the process of law. Hence, the present appeal must be rejected on this count alone. 35. In any event, the respondent submits that the factual positi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iance is inaccurate inasmuch as the sources namely Longman dictionary and Wikipedia are not reliable one and can be modified, amended or changed at anybody s end. Therefore, such resources cannot be relied upon and should not be even considered at first instance itself. 40. There could be no objection to this fact that the transaction under consideration involves transfer of property in movable goods. The respondent submits that, in the instant case, the customer approaches the respondent to buy Ice-cream. The customer accordingly, places the order from the price list and the same is delivered to them. In case of retail pack, the box is supplied as it is. However, in case of scoop, the flavour of choice is sold as per the customer preference i.e. in cup or cone. In either of the cases, the ice-cream received by the respondent from the franchisor is supplied as it is to the customer. No processing is done thereon, no customization is done. The respondent sells the said final products to the customer at agreed rates, as mentioned on price list. No extra money is charged from the customers. These facts have been admitted by the appellant department. 41. The intention of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice contract. The Supreme Court observed that when meals were served to casual visitors in the restaurant the service must be regarded as providing for the satisfaction of a human need and could not be regarded as constituting a sale of food when all that the visitors were entitled to do was to eat the food served to them and were not entitled to remove or carry away uneaten food. Supporting consideration included the circumstance that the furniture and furnishing, linen, crockery and cutlery were provided, and there was also music, dancing and perhaps a floor show. 45. To similar effect is another decision of Apex court in the matter of State of Himachal Pradesh v. Associated Hotels of India [1972] 2 SCR 937 = 1972 (1) TMI 80 - SUPREME COURT . The ratio decidendi of the above judgment is that what is to be adjudged in each case is as to whether the dominant intention in a given transaction was of sale and purchase of eatables or drinks. Interpreting the above judgments Hon ble high court of Andhra Pradesh in the matter of Durga Bhavan and Ors. [1981] 47 STC 104 (AP) = 1980 (9) TMI 260 - ANDHRA PRADESH HIGH COURT have summarized the ratio decidendi of the judgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent also place reliance on decision of the Rajasthan High Court in the matter of Govind Ram and Ors. Vs. State of Rajasthan and Ors. reported as AIR 1982 Raj 265 = 1982 (1) TMI 209 - RAJASTHAN HIGH COURT wherein the Hon ble High Court has held that:- 5. cases of sales of foodstuffs or eatables made across the counter, they are obviously transactions of sale, even though some service may be rendered in packing the foodstuffs, yet it may be so insignificant or incidental that the transaction would essentially be one of sale. Similarly, if food stuffs or drinks are supplied to customers outside the hotel or restaurant, then also the transactions may amount to sale. In case where the owner of the hotel or restaurant or the eating house charges separate amount by way of service charge for the service rendered by him besides the cost of the foodstuff supplied to the customer, then it would obviously appear that the transaction of sale of foodstuffs and service rendered by the hotelier or the owner of the restaurant have been separately charged. Moreover, it would also be a question of fact as to whether the customer has a right to take away the foodstuffs and in that case t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also registered under the GST Law as a reseller and has provided Ice creams as the goods that it deals in. It is mandatory for resellers of food and food service providers to obtain a license under the Food Safety and Standards Act, 2006. Our firm is registered under the said act as a Retailer . Copy of the said License/certificate is enclosed here with. Further, each of the stores are registered under the Maharashtra Shops and Establishment Act, 1948 and holds a registration certificate issued by the Municipal Corporation. The registration certificate describes the nature of business of the store as Sale of Ice-creams . Copy of this License/ registration Certificate is enclosed here with. This fact is undisputed even in the present appeal. The appellant department cannot go beyond such statutory recognitions. Hence, the present appeal is liable to be rejected. The transaction is of transfer of title in goods and not of composite supply. Notification No. 11/2017-C.T. (Rate) dated 28.06.2017 to the extent it treats even sale simpliciter of goods being food as service is beyond Para 6(b) of Schedule II of the CGST Act, 2017 53. Section 7(1A) of the CGST Act provides ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other manner whatsoever will mean that the supply of food can be in any other manner but there should be some element of service involved in the transaction. The aforesaid words occur in the entry with the words by way of or a part of any service. It is a settled principle of interpretation to construe words in an Act of Parliament with reference to words found in immediate connection with them. As per the rule of noscitur a sociis, the meaning of the word is to be judged from the company it keeps. Where two or more words, which are susceptible of analogous meaning, are coupled together they are understood to be used in their cognate sense. They take, as it were, their colour from each other, the meaning of the more general being restricted to a sense analogous to that of the less general. 58. Thus, a transaction of supply of foods would be covered within the ambit of Para 6(b) of Schedule II only if there is some element of service involved and if it is a composite supply. Further, the service element has to be seen at the time of making of supply. It is well understood that the nature of supply has to be determined at the time of supply; what happens prior to making of sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rink is supplied, other than those located in the premises of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes having declared tariff of any unit of accommodation of seven thousand five hundred rupees and above per unit per day or equivalent is chargeable to GST at the rate of 2.5%. The same is applicable on the condition that the input tax charged on goods and services used in supplying the service has not been taken. 63. The above notification prescribed the rate of CST to be charged on the supply of service. At the outset the respondent reiterates that since the activity undertaken by the respondent is that of supply of goods, the said notification is not applicable in the instant case. Even otherwise, the supply must be provided by a restaurant, eating joint including mess, canteen. The terms Restaurant, Eating Joints , Mess or Canteen have not been defined under the act. Further Section 2(120) provides that words and expressions used and not defined in this Act but defined in the Integrated Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Assessing Authority Vs. Amir Chand Om Parkash reported at 33 STC 120 = 1973 (5) TMI 85 - PUNJAB AND HARYANA HIGH COURT , wherein the High Court considered whether dhoop and aggarbatti fell within the ambit of the said Entry No. 16. It held that they did not for two reasons. The first of the two reasons is no longer valid by reason of a subsequent amendment, but the second reason is still valid. The Punjab Haryana High Court said:- So far as dhoop and aggarbatti are concerned, there is another way of looking at the matter. The entry (i.e., Entry No. 16) is cosmetics, perfumery and toilet goods The context in which the word perfumery occurs shows that what is meant by all the three general items cosmetics, perfumery and toilet goods are articles which are used for personal hygiene or pleasure. The items which are excepted from this entry are toothpaste, tooth powder, soap and kum-kum. This exception also points to the same conclusion, viz., that only those articles of luxury, which are used for personal hygiene and pleasure were intended to be included in this entry. So the word perfumery in this context would not include dhoop and aggarbatti, whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he goods are covered by a specific entry, the same cannot be classified under general/residuary entry. 70. Further, in the case of Moorco (India) Ltd. v. Collector of Customs, Madras 1994 (074) ELT 0005 (SC) = 1994 (9) TMI 68 - SUPREME COURT , the Hon ble Supreme Court held as under: The specific heading of the classification has to be preferred over general heading. The clause contemplates goods which may be satisfying more than one description. Or it may be satisfying specific and general description. In either situation the classification which is the most specific has to be preferred over one which is not specific or is general in nature. In other words, between the two competing entries the one most nearer to the description should be preferred. Where the class of goods manufactured by an assessee falls say in more than one heading one of which may be specific; other more specific, third most specific and fourth general. The rule requires the authorities to classify the goods in the heading which satisfies most specific description. ............. emphasis supplied 71. In the present case, SI. No. 22 of Notification No. 01/2017-CT (Rate) dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the outset, it is submitted that the said submission and the costing (as depicted) involved is wholly beyond the understanding of the respondent. The said submission is not germane to the issue at hand. It is not a subject matter of the ruling itself. It is not one of the questions proposed or answered by the Authority. Hence, as such, the said argument is frivolous, to say the least. The appellant department needs to be reminded that this is an appeal and not a show cause notice. 77. Second, in any case, the above argument is wholly based on surmises and conjectures. It is presumptive in nature and without any basis. There is no evidence led in by the appellant department in support of the said argument. 78. Third, in any event, the respondent submits that the franchise agreement is at arm s length. The Income Tax department has accepted the sale price of the goods by the franchisor to the franchisee. 79. Fourth, if the argument of the Department were to be accepted as correct, even then there is no element of service. The relationship between the franchisor and the franchisee is not the subject matter of the appeal. The supply made by the respondent to the end cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tt. Commissioner, State Tax from the appellant side, and by Shri V. Sridharan, Advocate from the respondent side. The representatives of both the Appellant as well as the Respondent reiterated their written submissions. Prior to this hearing, one letter dated 29.07.2019 was filed by the Deputy Director, PZU, wherein it was requested to grant an opportunity to present their side in the capacity of the concerned officer, as they had initiated investigation against the Respondent s franchisor, namely M/s. KOTI and its 11 other franchisees located in Mumbai, Delhi, Kolkata, Gurugram on 05.02.2019, which was before the date of filing of the advance ruling application i.e. 25.02.2019. They, inter alia, contended that the Respondent was not eligible to file the Advance Ruling application as the proceedings against its franchisor i.e. M/s. KOTI and some of its franchisees had already been initiated on the same issue as that of the questions raised in the advance ruling application, i.e. the classification of the activities carried out by the franchisees. They also, inter alia, interpreted the term Concerned Officer , which has been mentioned separately and deliberately besides the ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vt Ltd (in short KNRPL) which owns around 12 Naturals ice cream parlours in Mumbai, Delhi, Kolkata and Gurgaon. Both, KOTI and KNRPI, do their business operation from a common office cum factory premises, at Kandivali. Naturals ice cream is served from around 133 exclusive Naturals outlets across India and the business model runs on an identical franchise agreement entered between KOTI (franchisor) and owners of different Naturals outlets (franchisees). The annual turnover of ice cream manufactured and sold by KOTI to its franchisees, was roughly ₹ 200 Cr. 86. The Directorate General of GST intelligence (in short Pune Zonal Unit, Pune is the apex intelligence agency under Ministry of Finance. Department of Revenue which has been invested with powers to detect and investigate eases of GST evasion throughout the territory of India under the Central GST Act, 2017, irrespective of the fact that whether the tax payer is under the control and administration of Centre or State authorities vide Notification No. 14/2017 Central Tax dated 01.07.2017. 87. An intelligence was received by DGGI on 07.01.2019 that GST amounting ₹ 40.00 Cr approx, is being evaded by the franc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Creative IT India Pvt. Ltd. was recorded under Section 70 of central GST Act, 2017, where under it has been inter-alia confirmed the present Respondent is under obligation to use the billing software supplied by KOTI through M/s Creative IT India Pvt. Ltd. which contained inter alia classification of supply of ice cream made by the respondent and GST rate to be applied. It was further confirmed that the classification and GST rate cannot be changed by any of the franchisees including the present respondent and in fact all the franchisees have to follow the dictates of the franchisor. 92 . In the meantime, the present respondent Arihant Enterprises made an application dated 25.02.2019 before Maharashtra Advance Ruling Authority Mumbai on the issue of whether the supply of Ice Cream made by it from its retail outlet would be treated as supply of goods or supply of service or a composite supply . In this context-after due consideration of various submissions made before it, The Hon ble Maharashtra Authority For Ruling issued an order of Advance Ruling bearing GST-ARA-126 2018-19B-29 dated 19.03.2019, wherein, it is inter-alia held that the supply of ice cream by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Directors of KOTI, the decision was taken to file an application before the AAR through a common consultant Mr Chirag Mehta but the relevant facts about DGGI investigations was not incorporated in their application made before Advance Ruling Authority and thus the material facts were suppressed from the Advance Ruling authority. 96. that, it is admitted by Mr Mutha that at times they have melted ice cream received in Tubs of 0.5 kg (approximate 25% of receipts), meant of retail sale, but they scooped and served. It is noted that this act of the respondent is in contradiction to his submission before Authority for Advance Ruling that they do 70% of ice cream resale in Tubs with MRP as received and therefore misled the AAR to that extent. 97. that it is evident from the terms and conditions of the franchise agreement that in the entire scheme of KOTI, the franchisor had the upper hand and final say in every aspects of business and the applicant had no reason to approach the Authority for Advance Ruling on the issue of classification of supply especially when there was no any dispute had cropped up even from the concerned State Tax Officer in this regard. It appears that K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olding it void ab-initio in terms of Section 104 of the Act. 99. Further, the respondents have clearly misunderstood the provisions of Advance Ruling under Ch XVII of CGST Act, 2017. Provisions of section 104 are not self contained. In fact Section 102 of CGST Act, 2017 has provided both the Advance Ruling Authority and Appellate Authority for Advance Ruling with powers to rectify the errors apparent on the face of the records, which they can do suo-motu or when pointed by concerned officer, jurisdictional officer or the applicant or the appellant Thus, only in cases of errors being apparent on the face of the records, errors can be rectified by Authorities. In cases of such orders which are obtained by fraud, suppression, misstatement the orders need to be declared void for which the Authorities have powers. The respondents are trying to force certain word of his own into the Act to interpret the same for its own benefit. Due to the special nature of circumstances of the present case it became incumbent on the undersigned to point out the facts of the case and pray for intervention. Without prejudice to above, the present Appeal has its own merits, which are detailed here ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsumption on or away from the premises where such food or any other article for human consumption or drink is supplied, other than those located in the premises of hotels, inns, guest houses, clubs, campuses or other commercial places meant for residential or lodging purposes having declared tariff of any unit of accommodation of seven thousand five hundred rupees per unit per day or equivalent shall attract Central Tax @2.5% without any input tax credit under item (i) above and shall not be levied at the rate as specified under this entry It is to be noted in the above explanation that after the words provided by restaurant, eating joints there is a word including mess, canteen . The word including in this context suggest that the list given is not exhaustive as there is an intention of the legislature to widen the scope to include many other similar things. This view will also get support from the amending Notification No. 13/2018-C.T. (Rate) dated 26.07.2013, which further amends the original Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. The amended notification inserts Explanation I to serial no.7 column 3 item (i) reads as under:- Explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or phrases, it must be construed as comprehending such things as they, according to their nature and impact but also those things which the interpretation clause declares they shall include 105. that Hon ble Apex Court in its yet another landmark judgement in the case of Ramala Sahkari Chini Mills Ltd v. Commissioner of C.Ex., Meerut-I = 2010 (11) TMI 34 - SUPREME COURT it has been held that 15. Therefore, it is trite that generally the word include should be given a wide interpretation as by employing the said word, the legislature intends to bring in, by legal fiction, something within the accepted connotation of the substantive part. (Also see: C.I.T., Andhra Pradesh v. M/s. Taj Mahal Hotel, Secunderabad - (1971) 3 SCC 550 = 1971 (8) TMI 2 - SUPREME COURT , Indian Drugs Pharmaceuticals Ltd. Ors, Vs. Employees State Insurance Corporation Ors. - (1997) 9 SCC 71 = 1996 (11) TMI 474 - SUPREME COURT , T.N. Kalyana Mandapam Assn. Vs. Union of India Ors. -(2004) 5 SCC 632 = 2004 (167) E.L.T. 3 (SC.) = 2006 (3) STR.260 (S.C.) = 2004 (4) TMI 1 - SUPREME COURT , It is also well settled that in order to determine whether the word includes has t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t agreed between them. No franchise fees are charged separately. No sales promotion expenses, advertisement expenses, infra structure and business support etc provided to KOTI are reimbursed separately to the respondent. Storage expenses, serving expenses, etc. are not reimbursed separately by KOTI. But all the activities of the present respondent including billing, classification of goods/services, taxation etc. are under strict watch, control and guidance of KOTI. To cover all these aspects, KOTI offers more than 90% margin over and above the ex-factory cost price of ice cream supplied to the present respondent, as can be seen from the facts demonstrated below;- Naturals ice cream is supplied in Bulk packaging of 1.50 kg from KOTI: Ice cream price at KOTI-₹ 360/- per kg There is a discount of 6% given and Transportation cost from Mumbai Pune-₹ 6/-per kg which KOTI has included in Taxable value Thus, Taxable value at factory end - ₹ 344.4 per Kg i.e. (360-21.6+6=344.4/-) At franchisee/ ice cream parlour s end, sale value as fixed by the franchisor- ₹ 65/- per scoop of 80 gm inclusive of GST @18% i.e. its taxable value is ₹ 55.08/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 6 7 8= (6+7) July 17 to Feb 19 42672409 40640390 2032020 1212351 819669 5297001 6116670 111. Thus, from the above it may be seen that by opting to classify the supply as goods of HSN 2105 and to pay GST @ 18%, the respondent has paid less amount of GST in cash amounting ₹ 8,19,669/-. It can also be seen that the respondent has charged and recovered GST from the ultimate customers but stand not deposited to the govt, works out to ₹ 61,16,670/-. 112. that some of the major competitors in the field such as branded ice Cream under trade names Gelato , Baskin Robbins , Cafe Chokolade etc. have classified their activity of serving of Ice Cream at parlour ends as supply of services under SAC 996331 of the GST tariff of India and they have paid GST@ 5% without ITC w.e.f. 15..1.2017 by following the amending Notification NO. 46/2011-Central Tax (Rate) dated 14.11.2017. 113. that sample photographs of a representative Natural Ice cream located in Pune city is being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s must use air conditioners to keep the items cool. It doesn t take an engineer to distinguish between the use of an air conditioner and a refrigerator. Thus. they have misrepresented earlier and now also they are trying to misguide the Authority and undermine the investigation. 116. That the respondents have advanced this argument that by choosing to pay higher tax @18% they are paying more taxes to the government exchequer. It is most respectfully submitted that investigations have revealed that most of the franchisees end up paying very low and in some cases NIL taxes in cash, whereas they collect the from the customers in cash at 18%. KOTI and its franchisees including the present respondents are found to be violating the law including suppressed sales which is being investigated in the present investigation. 117. That the reliance has been placed on the following judgments delivered in department s favour:- a. Advance Ruling No. KAR ADRG 21/2018 dated 21stAugust, 2018 in the case of M/s Coffee Day Global Ltd = 2018 (9) TMI 1042 - AUTHORITY FOR ADVANCE RULINGS, KARNATAKA . b. Advance Ruling in the case of case of Jabalpur Entertainment Complexes P. Ltd = ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of this Act: ... emphasis supplied 123. In the present case, there is no proceeding pending against the applicant-respondent, i.e., M/s. Arihant Enterprises. The DGGI Officer has submitted in its affidavit that investigations were initiated against the Franchisor (KOTI) and some of its franchisee on 05.02.2019 before the filling of the application by the applicant-respondent and thus the application is not maintainable. Further, it has been submitted by DCGI Officer that the approval for initiation of the proceeding against all the franchisee including the applicant-respondent was received on 15.01.2019. 124. However, despite all the averments made by the DGGI Officer in his affidavit, he has failed to submit any evidence of any proceeding initiated against the applicant-respondent. He has merely stated that the investigations were initiated against the Franchisor (KOTI) and some of its franchisees. Further, even if approval has been obtained for initiation of investigation of all franchisee, it is an admitted fact that no summons has been issued or no inquiry has been initiated against the applicant-respondent till date. 125. Per contra, the DGGI Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been filed on the direction of the DGGI. It is submitted that the section provides for appeal in case the jurisdictional officer is aggrieved. The DGCI Officer has in his affidavit submitted that Notification No. 14/2017-Central Tax dated 01.07.2017 give power to DGGI to investigate and detect cases of GST evasion irrespective of whether the assessee is under the control and administration of Centre or State authorities. Further, it has been stated that DGGI was not made party to the Advance Ruling either in the capacity of jurisdictional officer or concerned officer. 131. It is submitted that Notification No. 14/2017-Central Tax dated 01.07.2017 issued under the CGST Act provides that DGGI will have same power as are exercisable by the Central Tax Officer of the corresponding rank. 132. However, the notification does not provide that DGGI will be jurisdictional officer of all assessee whether under the administration of Centre or State authority. The applicant-respondent is under the Jurisdiction of Assistant Commissioner, State Tax, Pune. Thus, DGGI is not jurisdictional/concerned officer of the applicant-respondent and has no locus standi to compel the jurisdictiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is sub-section unless an opportunity of being heard has been given to the applicant or the appellant ............... emphasis supplied 136. On plain perusal of the above sections, it can be seen that this provision empowers the respective authorities viz. Authority for Advance Ruling who passed the order on the application for advance ruling and Appellate Authority passes an appellate order on such ruling where in the advance ruling has been challenged by way of appeal, to rectify error apparent on the face of the record, or to suo-moto recall the orders passed, if at any stage it is found that the same has been obtained by means of fraud, suppression of material facts or misrepresentation of facts. 137. However, appeal does not lie against the order of Authority for Advance Ruling under section 102 or 104 of CGST Act. The submissions of the DGGI Officer that the appeal lies in the present case is contrary to the above provisions of the CGST Act. 138. In para 13 of the affidavit filed by DGGI Officer it has been stated that the applicant respondent has melted the ice cream from tubs and scooped the same. It is submitted that the fact that the ice cream is melte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the transaction is purely of service to satisfy the human need and there is no sale of goods involved. For instance, service of food in a restaurant where the customer can only have the food and cannot take it away. As a part of any service means that there is a transfer of title in goods but that that transaction is a part of a composite transaction of goods and service. For instance, supply of food to a customer staying in a hotel. 143. Further, the words in any other manner whatsoever will mean that the supply of food can be in any other manner but there should be some element of service involved in the transaction. The aforesaid words occur in the entry with the words by way of or a part of any service. It is a settled principle of interpretation to construe words in an Act of Parliament with reference to words found in immediate connection with them. As per the rule of noscitur a sociis, the meaning of the word is to be judged from the company it keeps. Where two or more words, which are susceptible of analogous meaning, are coupled together they are understood to be used in their cognate sense. They take, as it were, their colour from each other, the meaning of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in the matter of Sangu Chakra Hotels Private Limited vs. State of Tamil Nadu reported in [1985] 60 STC 125 = 1985 (1) TMI 278 - MADRAS HIGH COURT opined as under: 12. It is common knowledge that in the case of a restaurant simpliciter, a person may either go to a restaurant merely for the purpose of buying articles of food and taking them home in a parcel, or he may go to the restaurant with the avowed object of ordering out articles of food for the purpose of consumption In the restaurant itself. The question as to whether any service is involved or not, if at all it arises, it will arise only in the second class of cases. In the first category of cases where articles of food are sold across the counter it is a sale, pure and simple, like-any other commodity in any other shop with no element of service involved. If at all any service is involved, It is in no way different from the service involved in ordinary transaction of sale of any other goods which are sold across the counter. It is difficult to see how such a transaction which is purely of sale and purchase of articles of food can be outside the taxing power of the State Legislature having regard to entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ider a case where an ordinary person intends to go out with his family to a restaurant, whether he will go to the ice cream retail outlet as operated by the applicant-respondent? Certainly not. Thus, an ice cream retail outlet cannot be considered as a restaurant. 152 . Further, the DGGI Officer has submitted in the affidavit that the Notification uses the term includes which is used to widen the scope of the entry for restaurant service. In this regard, it is submitted that the aforesaid notification, to the extent it treats even the sale simpliciter of food article (take away) as a service, merely on the basis of the place from such sale is made, is beyond the scope of Para 6(b) of Schedule II of the CGST Act. 153. Thus, the present case of the applicant-respondent is covered by Para 1(a) of Schedule II of the CGST Act and HSN code 2105 leviable to tax at the rate of 18% with input tax credit. Even from the point of view of revenue, the applicant-respondent is paving approx. 5% of the taxable turnover approx. 5% of the taxable turnover in cash. 154. The DCGI Officer has in his affidavit at para 24 given a working of tax paid by the applicant-respondent in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the written submissions made in the reply to the affidavit filed by the DGGI, countering vehemently the allegation made against the Respondent, by the DGGI, PZU. Discussion and findings 160. The jurisdictional officer has made a prayer for condonation of delay as the advance ruling was received by the officer on 16.4.2019 and the appeal is filed on 11.6.2019. It is stated that the facts crucial to the case were brought to the notice of the jurisdictional officer by the Dy Director through letter dt 14.5.2019 and therefore the appeal could not be filed before 30 days of the communication of the order. As per proviso to Section 100(2) the Appellate Authority, if satisfied that the appellant had sufficient cause for late filing, can condone the delay if it is presented within a further period not exceeding thirty days. We are satisfied that the appellant had sufficient cause in filing the application late and therefore we condone the delay. 161. The appeal has been filed by the department on the following points.- 1) It was brought to the notice of the appellant by the DGGI, Pune Zone Unit, Pune vide letters dt 14th and 17th May, 2019 that Arihant Enterprises ( h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the directors of KOTI, the decision was taken to file on application before the AAR, but the relevant facts about the investigation, was not incorporated in the application 5) In the entire scheme agreement of KOTI had the upper hand and had its own role behind the application as investigation was already initiated against all the Franchises outlets. The applicant has no reason to approach the Authority of Advance Ruling on the issue of classification of supply especially when there was no immediate dispute about the issue. 6) The application is not maintainable as per the provisions of Section 98(2) as proceedings were already initiated on 05.02.2019 against KOTI and all of its franchises which was much before the filing of the application before the AAR 25.02.2019. The proceeding under CGST Act was approved on 15.02.2019. KOTI and its directors were aware of the ongoing investigations against all of their Franchises which included the applicant 7) The order is obtained by fraud suppression needs to be declared void. 162. We have gone through the facts of the case. The relevant sections are as follows:- 98(2) The Authority may, after examining th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout ITC. 164. There is no dispute that there is an agreement between Kamath Ourtimes Ice Creams Pvt Ltd and the applicant-respondent dt 1.10.2011 which is termed as a Franchise Agreement . As per the agreement, Kamath has allowed the applicant-respondent to operate a Natural Ice cream shop, under the trademark owned by KOTI under a uniform system (which includes a special technique for packaging, displaying, merchandising and marketing the food products) of KOTI under certain Standards also set by KOTI. The applicant -respondent has a specific location assigned to it and it cannot relocate its shop as per the terms of agreement. The shop interior is also as per the designs set by KOTI with KOTI s architect. The exterior and interior signage must conform to the standards of KOTI. The advertising standards are also set by KOTI. Clause 11 of the agreement requires applicant-respondent to strictly comply with the system set by KOTI. Also, as per the statement of Mr Imran Kacchhi (Sr. Manager accounts of M/s Creative IT India) the menu/flavours of ice cream, pricing, taxes applicable, HSN codes of items is updated at the Head office of M/s KOTI only and outlets do not have provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cf its franchisees during February 2019. On being specifically asked I state that involvement of KOTI and the relevant facts of investigations initiated by the DGGSTI and details thereof was not incorporated in our application and hence the Advance Ruling authority was not aware of the same. 165. Thus, it is seen from the above facts of the case that investigations proceedings were approved on 15.01.2019 and the search was conducted on 5.2.2019. The statement of the Director of KOTI u/s 70 was recorded on 5.2.2019, and the statement of M/s Srinivas Kamath (Wholetime Director of KOTI) was recorded on 11.2.2019. The application for advance ruling was filed on 25.2.2019 by the applicant respondent at the behest of KOTI. It becomes clear from the above that there was a deliberate intention on the part of KOTI as well as its applicant-respondent to obtain a decision clandestinely without revealing the issue of investigation being initiated against KOTI on the very same issue that was raised before the ARA. 166. On behalf of Arihant Enterprises, it was argued that the appeal can only be filed by an aggrieved person. The Asst Commr., State Tax, Pune who is the jurisdictional of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion before the ARA on the same issue of classification of Ice-cream sold through the parlour which was taken up by DGGI. This is not an apparent coincidence as made out to be by the applicant-respondent. This reflects the deliberate intent on the part of franchisor and the franchisee to subvert the investigation proceedings and also a purposeful objective to hide facts which are critical to the AAR and the provisions relating to the AAR. It is trite law that when one comes for justice one should come with clean hands. This is not the case here. The applicant-respondent has attempted to show the technical errors in filing of the appeal but when the facts of the case are seen it is very clear that there is a premeditated and a conscious action on the part of the applicant-respondent to undermine the process of the Advance Ruling and an attempt to use it to satisfy their own ends. We therefore hold that the order of the AAR is void ab-initio as it was vitiated by the process of suppression of material facts. Our above view is fortified by the Hon. Supreme Court decision in the case of S.P. Chengalvaraya Naidu (Dead) by LRs. Vs. Jagannath (Dead) by LRs Ors. [(1993) Supp. 3 SCR 422 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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