M/S Corbett Nature Reserve vs. Union Of INDIA

Held

The Court quashed and set aside the order dated March 10, 2022, passed by the Appellate Authority for Advance Ruling. The matter was remanded back to the Appellate Authority for reconsideration of the appeal preferred by the petitioner. The Appellate Authority was directed to grant the petitioner an opportunity to present its case, specifically on the aspect that its services are not covered by the definition of composite supply. The Appellate Authority is to rule on this aspect independently, without the High Court examining the merits of the petitioner's plea. The petition was disposed of in these terms.

Facts

The petitioner, M/s Corbett Nature Reserve, filed a writ petition challenging an order of the Appellate Authority for Advance Rulings dated March 10, 2022, and an earlier order of the Authority for Advance Rulings dated September 28, 2021. The petitioner sought a mandamus to treat its Naturopathy Centre as eligible for exemption under entry No. 74 of Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017, classified under SAC Heading 9993. The petitioner contended that its Naturopathy Centre was a standalone facility, even though situated within hotel premises, and that the Authority for Advance Ruling wrongly classified its services as a composite supply, denying the exemption. The petitioner argued that this classification was not even the stand of the respondent-department and that the Appellate Authority failed to consider this aspect in its order.

Key Issues

1. Whether the Authority for Advance Rulings erred in classifying the services provided by the petitioner's Naturopathy Centre as a composite supply, thereby denying the benefit of exemption under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, contrary to the petitioner's stand and potentially without proper consideration of the departmental stance? (Mixed question of law and fact, concerning the interpretation and application of the concept of composite supply and exemption notifications). Petitioner's arguments: The petitioner argued that its Naturopathy Centre was a standalone facility and not part of a composite supply with its hotel business. It contended that the Authority for Advance Ruling's finding of composite supply was unexpected and not previously raised by the respondent-department. Furthermore, the petitioner asserted that the Appellate Authority failed to address this specific ground raised in its appeal. Respondents' arguments: The learned counsel for the respondents were not in a position to dispute the petitioner's submissions.