M/S Saisanket Enterprise vs. Authority For Advance Ruling

Held

The Court held that the petitioner's application for advance ruling was filed after a search and the issuance of a show-cause notice, which indicated that the issue of GST liability was already pending in proceedings under the GST/SGST Act, 2017. The Court referred to the definition of 'Advance Ruling' which implies seeking a decision in advance, either during or proposed to be undertaken, to avoid controversy. The first proviso to Section 98(2) of the CGST Act, 2017, clearly states that the authority shall not admit an application where the question raised is already pending or decided in proceedings under any provision of the Act. Since the petitioner had not approached the authority in advance before any proceedings commenced, and the issue was effectively pending due to the show-cause notice, the Authorities below were justified in declining to grant the advance ruling. The Court found no grounds to interfere with the impugned orders.

Facts

The petitioner, M/s Saisanket Enterprise, a works contractor registered under GST, was subcontracted for work on the Narmada Valley Project. Following a search by the Directorate General of Goods and Service Tax Intelligence, which indicated GST evasion, the petitioner received a notice on May 21, 2020, demanding payment of outstanding GST at 18% on works contract services provided as a sub-contractor between July 2017 and January 2018. Instead of responding directly to the notice, the petitioner approached the Authority for Advance Ruling (AAR) seeking a ruling on the applicable tax rate for a sub-contractor in dam construction, contending it should be 12% as per Notification No. 11/2017. The AAR declined to grant the advance ruling, citing the proviso to Section 98(2) of the CGST Act, 2017, as the question was pending in proceedings. The Appellate Authority upheld this decision. The petitioner then filed a writ petition before the High Court.

Key Issues

1. Whether the Authorities below erred in interpreting Section 98(2) of the CGST Act, 2017, by declining to grant an advance ruling when no proceedings were pending against the petitioner at the time of filing the application? Petitioner's Argument: The petitioner argued that the proviso to Section 98(2) of the CGST Act, 2017, which bars advance rulings if the question is pending or decided in any proceedings under the Act, was misinterpreted. They contended that no such proceedings were pending against them when they approached the AAR, and therefore, the authorities should have decided the issue on merits. They sought a remand of the matter for adjudication. Respondents' Argument: The respondents (Authorities for Advance Ruling and Appellate Authority) relied on the proviso to Section 98(2). They argued that the petitioner approached the AAR only after a search and the issuance of a show-cause notice, indicating that the issue of GST liability was already pending in proceedings under the GST/SGST Act, 2017. Therefore, the authorities rightly declined to grant an advance ruling as the petitioner had not approached them in advance.