The Telangana Authority for Advance Ruling (Telangana AAR), held that ‘Advance Ruling’ cannot be made for a person not registered in the State of Telangana. The members present were B. Raghu Kiran, IRS, Additional Commissioner (Central Tax), and S.V. Kasi Visweswara Rao, Additional Commissioner (State Tax).
The applicant, M/s. Granules USA Inc is a manufacturer of bulk drugs and a wholly owned subsidiary of Granules India Limited. M/s. Granules USA Inc. supplied pharmaceutical tablets to M/s. Lambda Therapeutic Research Ltd. from the USA on behalf of Granules India Limited. The material was shipped through one ‘World courier’ to M/s. Lambda Therapeutic Research Ltd. Ahmedabad. M/s. World courier filed a bill of entry in the name of Lambda and discharged IGST. The applicant claimed that the recipient of the goods M/s. Lambda Therapeutic Research Ltd is eligible to take credit of the IGST so paid and is duty bound to pass on the same to the applicant who is the ultimate recipient of goods. The only issue raised by the applicant is whether Lambda Therapeutic Research Ltd. is eligible to avail ITC paid by World Courier and discharge IGST.
Telangana AAR applied the doctrine of territorial nexus to decide the present matter. The doctrine of territorial nexus states that laws made by a State Legislature are not applicable outside the state, except when there is a sufficient nexus between the state and the object. The doctrine derived its authority from Article 245 of the Constitution of India.
The Telangana AAR observed ”Section 96 of the CGST & SGST Acts clearly state territorial nexus of an Advance Ruling authority so that authority for Advance Ruling shall function as such an Authority for Advance ruling for that State or Union Territory in which it is constituted under the CGST & SGST Acts. Evidently, the applicant seeks clarification regarding the question impacting a taxable person who is not a registered taxable person in the State of Telangana. Therefore an ‘Advance Ruling’ cannot be made for a person not registered in the State of Telangana in light of this provision.”
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