Introduction
In the case of Power Grid Corporation of India Ltd. v. State of Rajasthan[i], the Rajasthan Authority Advance Ruling (‘AAR’) had rejected the application for an advance ruling filed by the Power Grid Corp. of India Ltd. (‘Petitioner’) on the grounds that the petitioner was not a supplier. The Hon’ble High Court of Rajasthan held that the Petitioner, liable to pay tax on a reserve charge basis, could file an application to seek an ‘advance ruling’ under the Central Goods and Services Tax Act, 2017 (‘CGST’).
Brief Facts
The Petitioner, registered under the CGST Act, engaged contractors to supply materials/ goods to those who raised invoices on the Petitioner.
The Petitioner sought an advance ruling to determine whether the services provided by the contractors were exempt as per Sr. No. 18 of the notification[ii].
The AAR rejected the application at the admission stage, stating that the Petitioner was not the supplier and, hence, the application was not maintainable under s. 97 of the CGST Act.
Being aggrieved by the rejection under s. 98 (2) of the CGST Act, the Petitioner approached the High Court through the writ petition. The Petitioner contended that if the exemption notification is not applicable, it would be liable to pay tax on a reverse charge basis and argued that ss. 95 and 97 of the CGST Act do not restrict the application for advance ruling to suppliers only.
The AAR argued that the order is appealable under s. 100 of the CGST Act; therefore, the writ petition is not maintainable.
Held
The High Court of Rajasthan held that as per the definition of advance ruling under s. 95(a) of the CGST Act, an ‘advance ruling’ can be obtained at the applicant's request regarding the supply of goods or services or both.
The High Court observed various provisions of the CGST Act. It observed that under s. 97(1) of the CGST Act, any person (applicant) can file an application for an advance ruling specifying the questions for which the ruling is sought. The court also interpreted s. 97(2) of the CGST Act in respect of the present case, where the applicant can seek an advance ruling for applicability of notification under the CGST Act.
Further, the court observed that if the Petitioner is not exempt, registration under s. 24 of the CGST Act is mandatory, as it mandates the registration of a person liable to pay tax on a reverse charge basis.
Regarding the interpretation of the supplier of goods or services or both or being undertaken by the applicant, the court relied on the Supreme Court’s decision[iii] and observed that the meaning of supplier is contextual; it does not restrict the scope of the definition of the applicant. Thus, the court held that there is no embargo that a person liable to pay tax on a reverse change basis cannot file an application for an advance ruling.
Lastly, the court held that there is no provision for an appeal against the rejection of an application under s. 98(2) of the CGST Act, the appeal against the advance ruling can be filed under s. 100 of the CGST Act only for the orders pronounced under s. 98(4) of the CGST Act.
Hence, the High Court set aside the impugned order passed by the AAR, rejecting the application under s. 98 (2) of the CGST Act and remitted the matter to the AAR to decide the application afresh under s. 98(4) of the CGST Act.
Conclusion
The High Court of Rajasthan correctly interpreted the provisions of advance ruling under the CGST Act. The court affirmed that the provisions under the CGST Act do not preclude a person liable to pay tax on a reverse charge basis to file an application for advance ruling, thereby expanding the interpretation of the applicant under the CGST Act.
End Notes
[i] [2024] 165 taxmann.com 80 (Rajasthan) dated 18.07.2024.
[ii] Notification no. 12/2017 Central Tax (Rate) dated 28.06.2017.
[iii] Vanguard Fire and General Insurance Company Limited, Madras v. Fraser and Rose and Anr., AIR 1960 SC 971.
Authored by Purvi Garg, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinions.