AAAR upholds AAR Order: GST Advance Ruling Denied as DGGI Investigation Preceded Application [Read Order]

The Tamil Nadu State Appellate Authority for Advance Ruling ( AAAR ) has upheld the decision of the Authority for Advance Ruling ( AAR ), rejecting an application filed by the Tamil Nadu Nurses and Midwives Council seeking clarity on the applicability of GST on various fees collected by them.

The AAAR ruled that since the Directorate General of GST Intelligence ( DGGI ) had already initiated an investigation into the matter before the application was filed, the advance ruling could not be admitted under the first provision to Section 98(2) of the CGST/TNGST Act, 2017.

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The Tamil Nadu Nurses and Midwives Council, established under the Tamil Nadu Nurses and Midwives Act, 1926, is responsible for regulating nursing professionals and conducting examinations for registration. The council had approached the AAR to determine whether GST was applicable on fees collected for services such as examinations, registrations, and other regulatory activities. However, the AAR rejected the application, noting that the DGGI had already begun an investigation into the council’s tax liabilities for the period from July 2017 to March 2022. The council then appealed against this decision before the AAAR.

During the proceedings, the council argued that the term "proceedings" under Section 98(2) of the CGST Act should not include investigations or summons issued by tax authorities. They relied on various judicial precedents, including judgments from the Supreme Court and High Courts, to contend that proceedings only commence with the issuance of a show-cause notice and not during the investigation stage. The council cited the Supreme Court’s ruling in Radha Krishna Industries v. State of Himachal Pradesh and the Telangana High Court’s decision in Srico Projects Pvt. Ltd. to support their argument that mere inquiries or investigations do not qualify as "proceedings."

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However, the AAAR, comprising Dr. Ram Niwas, IRS, and Dr. D. Jagannathan, IAS, disagreed with the council’s interpretation. The bench emphasized that the term "proceedings" under GST law has a broader scope and includes investigations, inquiries, and other pre-adjudication processes. Referring to Section 66 of the CGST Act, the AAAR noted that the phrase "any other proceedings" is used alongside terms like scrutiny, inquiry, and investigation, indicating that these activities are also considered proceedings under the law. The bench further highlighted that the Andhra Pradesh High Court’s ruling in Master Minds v. Appellate Authority for Advance Ruling had already established that investigations fall within the ambit of "proceedings," thereby barring advance rulings on issues already under examination.

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The AAAR also pointed out that the DGGI had issued summons and recorded statements from the council’s registrar in April and June 2022, well before the advance ruling application was filed in June 2022. Additionally, an incident report dated June 24, 2022, confirmed that the investigation was already underway. Since the subject matter of the advance ruling application was identical to the issues under investigation, the AAAR concluded that the AAR had correctly rejected the application.

In its final order, the AAAR upheld the AAR’s decision, dismissing the council’s appeal.

To Read the full text of the Order CLICK HERE

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