AAAR Upholds AAR Order: DGGI Summons Qualify as 'Proceedings' under GST, Bars TN Medical Council's Advance Ruling [Read Order]

The Tamil Nadu Appellate Authority for Advance Ruling (AAAR) has upheld the Authority for Advance Ruling's (AAR) decision that summons issued by the Directorate General of GST Intelligence (DGGI) constitute 'proceedings' under GST law, thereby barring the Tamil Nadu Medical Council (TNMC) from seeking an advance ruling on the taxability of its fees. The AAAR's order reinforces that any ongoing investigation under GST provisions precludes applicants from obtaining advance rulings on the same matter.

The case originated when TNMC, which collects various registration and certification fees from medical practitioners, filed an advance ruling application in December 2022 seeking clarity on whether these fees attracted GST. However, the AAR rejected the application in September 2024, noting that DGGI had already initiated an investigation into the same issue by issuing summons to TNMC in November 2022. The council appealed this decision, arguing that mere summonses did not qualify as 'proceedings' under GST law and that only formal show-cause notices should trigger such restrictions.

In its detailed analysis, the AAAR examined the broader definition of 'proceedings' under the CGST Act. It observed that Section 66 of the Act explicitly links scrutiny, inquiry, and investigation to 'any other proceedings,' indicating that these investigative steps are integral to GST proceedings. The authority emphasized that the first proviso to Section 98(2) uses the term 'any proceedings' without limitation, encompassing all actions under the Act, including preliminary investigations. The AAAR also distinguished TNMC's reliance on court judgments from other tax regimes, noting that GST's unique framework requires independent interpretation.

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The AAAR referenced two conflicting High Court rulings on the issue. While the Telangana High Court in Srico Projects Pvt. Ltd. (2022) had held that investigations don't qualify as proceedings, the Andhra Pradesh High Court in Master Minds (2022) ruled that DGGI summonses do constitute proceedings under GST. The AAAR sided with the latter, noting its reasoned alignment with GST's statutory intent. It highlighted that DGGI's summonses to TNMC in November 2022—seeking fee collection details—preceded the council's advance ruling application by a month, making the investigation the earlier proceeding on the same issue.

The bench comprising Dr. D. Jagannathan, IAS, Commissioner of Commercial Taxes, and Dr. Ram Niwas, IRS, Principal Chief Commissioner of GST & Central Excise, concluded that allowing advance rulings during active investigations would undermine GST's procedural integrity. The order reaffirms that taxpayers cannot seek rulings to preempt or parallel ongoing inquiries by tax authorities. This decision sets a precedent for similar cases, clarifying that the term 'proceedings' u/s 98(2) includes all investigative actions, not just formal adjudications.

The ruling leaves TNMC to engage with DGGI's ongoing investigation, closing the door on obtaining an advance ruling unless the probe concludes without a decision on the taxability question.

To Read the full text of the Order CLICK HERE

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