Whether investigation post filing of an application for advance ruling would debar the applicant from seeking advance ruling? Telangana High Court answers

Telangana High Court

   

Telangana High Court: While allowing the instant petition filed under Article 226 of the Constitution of India, for quashing the impugned order dated 03-06-2022 passed by Telangana State Authority for Advance Ruling (‘Authority') and to consider the application for advance ruling under Section 98 of the Central Goods and Services Tax Act, 2017 (‘CGST'), the division bench of Ujjal Bhuyan, C.J., and C.V. Bhaskar Reddy, J., held that the investigation post filing of the application will not debar the applicant from seeking an advance ruling.

Facts:

The petitioner is a private limited company incorporated under the Companies Act, 1956 and is engaged in the business of undertaking works contract mostly with the Central and State Governments. The petitioner is a registered supplier under the CGST Act .

As per the petitioner's counsel, the rate of Goods and Service Tax (‘GST') for work contracts undertaken with the Central Government Employees Welfare Housing Organization (‘Organization') will be 18%. But according to the Organization, GST will be 12%. Hence, the Organization paid GST to the extent of 12% and, after deducting the same, made a payment to the petitioner due to which the petitioner incurred a loss besides being susceptible to the charge of underpaying GST.

On 11-05-2019, the petitioner submitted an application for advance ruling on the question as to what would be the rate of tax on works contract services rendered by it to the Organization. However, there was inordinate delay in providing advance ruling.

On 15-02-2021, the respondent issued a letter to the petitioner alleging short payment of GST i.e., 12 % instead of 18% which was followed by summons to the Managing Director, directing his appearance before the respondent on 05-01-2022.

After 3 years, on 25-04-2022, the Authority issued notice to the petitioner scheduling a personal hearing on 27-04-2022. The petitioner requested the Authority to give a ruling on the application dated 11-05-2019. The Authority noted that the Directorate General of GST Intelligence (‘DGGI') had initiated an enquiry on the question raised by the petitioner. Through the impugned order dated 03-06-2022, the application was rejected and thereby, the present petition is filed.

Issue:

Whether investigation post- filing of an application for advance ruling would debar the applicant from seeking advance ruling?

Observation and Decision:

The Court observed that the word “proceedings” has neither been defined in Chapter XVII (deals in advance ruling) nor in the definition clause of the CGST Act. Therefore, the enquiry or investigation would not come within the ambit of the word “proceedings”.

The Court held that the Authority was not justified in rejecting the application of the petitioner. Further, the Court directed the Authority to take on the application filed on 11-05-2019 and pass an appropriate order after giving due opportunity oh hearing to the petitioner within a period of 2 months.

[Srico Projects (P) Ltd v. Telangana State Authority for Advance Ruling, decided on 17-08-2022]


Advocates who appeared in this case :

Dr. S.R.R. Viswanath, Advocate, for the Petitioner;

Ms. Sapna Reddy, Advocate, for the Respondent.

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