The Telangana High Court has held that the investigation initiated post-filing of the application would not debar the application seeking Advance Ruling.
The Petitioner, M/s. Srico Projects Pvt. Ltd engaged in the business of undertaking works contracts mostly with the Central and State Governments. Petitioner is a registered supplier under the CGST Act and related Acts. The rate of GST for works contracts undertaken with the Central Government Employees Welfare Housing Organisation would be 18% (CGST 9% + SGST 9%) but for the Central Government Employees Welfare Housing Organisation, GST would be 12% (CGST 6% + SGST 6%).
The Central Government Employees Welfare Housing Organisation paid GST to the extent of 12% and after deducting the same made payment to the petitioner which caused a loss to the petitioner. Petitioner submitted an application for advance ruling on 11.05.2019 on the question as to what would be the rate of tax on works contract services rendered by it to the Central Government Employees Welfare Housing Organisation. The application for the advance ruling was rejected due to the inordinate delay in providing an advance ruling.
The respondent tried to justify their action by contending that DGGI started an investigation into the business activities of the petitioner which was not disclosed by the petitioner.
It was observed that any proceedings pending or decided in the case of an applicant under the provisions of the CGST Act, would mean proceedings, where the question raised in the application for advance ruling, has already been decided or was a pending decision. Further observed that the inquiry or investigation would not come within the ambit of the word “proceedings”.
It was evident that notice was issued to the petitioner by DGGI on 15.12.2021 much after the filing of the application for advance ruling and the same cannot be a bar under the first proviso to sub-section (2) of Section 98 of the CGST Act.
The Court observed that in a case the Telangana State Authority for Advance Ruling held that such investigation post-filing of application would not debar the applicant from seeking advance ruling and accordingly advance ruling was granted.
While allowing the petition Chief Justice Ujjal Bhuyan and Justice C V Bhaskar Reddy viewed that Telangana State Authority for Advance Ruling was not justified in rejecting the application of the petitioner vide the order dated 03.06.2022 and the said order dated 03.06.2022 was set aside and quashed.
The Petitioner was represented by Dr S.R.R. Viswanath and the respondent was represented by Ms Sapna Reddy.
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