Investigation Post Filing Application Would Not Debar Applicant From Seeking Advance Ruling: Telangana High Court
The Telangana High Court has held that the investigation post-filing of the application would not debar the applicant from seeking an advance ruling.The division bench of Chief Justice Ujjal Bhuyana and Justice C.V.Bhaskar Reddy has observed that the word "proceedings" has neither been defined in Chapter XVII nor in the definition clause, i.e., in Section 2 of the CGST Act. The inquiry...
The Telangana High Court has held that the investigation post-filing of the application would not debar the applicant from seeking an advance ruling.
The division bench of Chief Justice Ujjal Bhuyana and Justice C.V.Bhaskar Reddy has observed that the word "proceedings" has neither been defined in Chapter XVII nor in the definition clause, i.e., in Section 2 of the CGST Act. The inquiry or investigation would not come within the ambit of the word "proceedings".
The petitioner is a private limited company incorporated under the Companies Act, 1956. It is engaged in the business of undertaking work contracts, mostly with the Central and State Governments. The petitioner is a registered supplier under the CGST Act and related Acts.
As per the petitioner, the rate of GST for work contracts undertaken with the Central Government Employees Welfare Housing Organisation would be 18%. According to the Central Government Employees' Welfare Housing Organisation, GST would be 12%. The Central Government Employees Welfare Housing Organisation paid GST to the extent of 12% and, after deducting the same, made a payment to the petitioner. It caused a loss to the petitioner, besides being susceptible to the charge of underpaying GST.
The petitioner submitted an application for an advance ruling on 11.5.2019 on the question as to what would be the rate of tax on work contract services rendered by it to the Central Government Employees Welfare Housing Organisation. However, there was an inordinate delay in providing an advance ruling.
The respondent issued a letter dated 15.02.2021 to the petitioner alleging a short payment of 12% GST instead of 18%. It was followed by the issuing of summons to the Managing Director of the petitioner under Section 70 of the CGST Act, directing his appearance before the respondent on 05.01.2022 and the issuance of subsequent summons by the respondent.
After three long years, the authorities issued notice to the petitioner on April 25, 2022, scheduling a personal hearing on April 27, 2022. The authorised representative of the petitioner appeared for such a personal hearing and requested the authority to give a ruling on the question raised in the application dated 11.05.2019. By the order dated 3.06.2022, the application for an advance ruling was rejected.
The Telangana State Authority for Advance Ruling noted that the Directorate General of GST Intelligence (DGGI) had initiated an enquiry into the business activities of the petitioner and had issued notice to the petitioner on 15.12.2021. The case of the petitioner falls under the first provision of Section 98(2) of the CGST Act; the authority rejected the application for advance ruling.
The issue raised was whether investigation post-filing of an application for advance ruling would debar the applicant from seeking advance ruling.
The court held that the Telangana State Authority for Advance Ruling was not justified in rejecting the application of the petitioner.
The court directed the Telangana State Authority for Advance Ruling to take on board the application filed by the petitioner and pass an appropriate order under Section 98(4) of the CGST Act after giving due opportunity of hearing to the petitioner.
Case Title: M/s. Srico Projects Pvt. Ltd. Versus Telangana State Authority for Advance Ruling,W.P.No.26145 Of 2022
Citation : 2022 LiveLaw (Tel) 85
Dated: 17.08.2022
Counsel For Petitioner: Dr. S.R.R. Viswanath
Counsel For Respondent: Advocate Sapna Reddy