The Appellate Authority for Advance Ruling (AAAR), Gujarat, has recently in an appeal filed before it held that commencement of investigation is a judicial bar for advance ruling.
The aforesaid observation was made by the AAAR, when an appeal was preferred before it by M/s. Shalby Limited, against the Advance Ruling of the Gujarat Advance Ruling Authority(GAAR), dared 19.07.2021.
The facts of the case were that the Gujarat Authority for Advance Ruling (GAAR) vide its Advance Ruling No. GUJ/GAAR/R/31/202l dated 19.07.2021, observed that in the advance ruling application dated 02.12.2020, the appellant had declared that no proceedings were pending or decided with respect to the question raised in the application, while the Revenue had already initiated assessment to business premises under Section 7l of GGST Act on 04-06.2019 and the same was converted into search proceedings under section 67(2) of the act on 05.06.2019, with search proceedings continuing till 06.06.2019.
Thereafter, three forms were issued by the Revenue, all dated 11.02.2020; followed by the submission that Section 70(2) of the CGST Act has deemed provision that every inquiry referred in subsection (l) shall be a Judicial proceeding within the meaning of Section 193 and 22g of Indian Penal Code and therefore that the subject inquiry initiated under Section 70 (l) of the SGST Act,2017 is a judicial proceeding.
It was further submitted by the Revenue that the word any proceeding’ under Section 9g(2) of CGST Act will include investigation proceedings launched by state revenue, as well as proceeding initiated vide GST DRC-Ol A part A dated rr.02.2020, and hence that the appellant had intentionally chosen not to declare the proceedings initiated vide GST DRC-0lA and misdeclared at Sr.No.l7 of Form GST ARA-01.
The Revenue hence contented that the Advance Ruling cannot be used as a mechanism to nullify and frustrate the inquiry proceeding already initiated. And in the view of above, the GAAR declared Advance Ruling No. GUJ/GAAR/R/112020 dated 20.01.2021 void as ab-inito, in terms of Section 104 of CGST Act. And it is against the same that the appellant has preferred the instant appeal before the Appellate Authority for Advance Ruling, Gujarat.
“There can be no doubt that the appellant had indeed not declared/ mis-declared the fact of initiation of proceedings clearly evidenced by GST DRC-O1A Part A, issued in this case, and therefore this is also covered under the scope of the term ‘suppression’ ”, the Appellate Authority for Advance Ruling consisting of Milind Torawane, the SGST Member, along with VivekRanjan, the CGST Member observed.
“It was incumbent upon the appellant while making an application for Advance Ruling, to have declared the true and complete facts, given the provisions of the GST law, in particular, Sections 98(2) and 104 of the CGST Act, 2017”, the Appellate Authority for Advance Ruling added.
Thus, pronouncing its ruling, the AAAR held:
“We, therefore hold that invocation of Section 104 of CGST Act by the GAAR and declaring advance ruling dated 20.01 .2021 as void ab initio, is legal”.
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