AAR and AAAR Weekly Round Up

This round-up analytically summarises the key stories related to the Goods and Services Tax Authority for Advance Ruling (AAR) and Appellate Authority for Advance Ruling (AAAR) reported at Taxscan.in during the period from June 28, 2025 to August 02, 2025.

No GST Exemption for School Bus Services Paid Directly By Parents: AAAR

In Re: Tvl.Batcha Noorjahan (M/s. School Transport) CITATION : 2025 TAXSCAN (AAAR) 117

The AAAR Tamil Nadu State Appellate Authority for Advance Ruling (AAAR) ruled that no Goods and Services Tax (GST) exemption is available for school transportation services where payments are made directly by parents.

Referring to the exemption under Sl. No. 66 of Notification No. 12/2017-CTR, the AAAR emphasized that the benefit is available only when services are provided to an educational institution. In this case, the service was not provided to the schools but directly to students or parents, who bore the cost and engaged the appellant independently.

The AAAR clarified that merely entering into agreements with schools does not alter the taxability when the schools are not paying for the service. The schools paid no consideration and the schools were not recipients of the service, so the conditions for GST exemption were not met.

GST Applicable on Batteries Manufactured using Extracted Silver received for Free from Navy: AAAR holds Activity is Not Job Work

In Re: M/s HighEnergy Batteries (India) Limited CITATION : 2025 TAXSCAN (AAAR) 118

The Tamil Nadu Appellate Authority for Advance Ruling (AAAR) recently upheld the decision of the Authority for Advance Ruling that Goods and Services Tax (GST) is applicable on the value of silver that is extracted from old or used batteries received free of cost from Indian Naval formations. The silver extracted from the old batteries are then repurposed to manufacture new batteries by the applicant.

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Since the supply of used batteries by the recipient contributes directly to the value of the finished goods, the same was liable to be included in the taxable value under Section 15(2)(b) of the CGST Act. The AAAR clarified that merely entering into a contract excluding the value of free-supplied goods cannot override the operation of Section 15(2)(b).

Steel Manufacturer not eligible for GST ITC on Goods/Services used Exclusively for Running Solar Power Plant: AAR

In Re: M/s.Kanishk Steel Industries Limited CITATION : 2025 TAXSCAN (AAR) 123

In a significant development for the renewable energy sector within India’s manufacturing industry, the Tamil Nadu Authority for Advance Ruling (AAR) has held that Kanishk Steel Industries Limited, a leading steel manufacturer, is not eligible to claim Input Tax Credit (ITC) on goods and services used exclusively for the operation and maintenance of its 10.2 MW solar power plant.

The two-member panel Shri Balakrishna S (CGST) and Shri B. Suseel Kumar (SGST) ruled against Kanishk Steel’s contentions.

It was noted that, electricity generation and supply to TANGEDCO is supplied under GST but attracts a “nil” rate of tax, classified as exempt supply (HSN 27160000). Thus, Goods and services used exclusively to provide exempt supplies are not eligible for ITC, as per Section 17(2) and related rules.

No GST ITC available on Inputs/Capital Goods/Input Services of Items used in Design, Engineering, Installation of Solar Power Plant: AAR

In Re: M/s.Kanishk Steel Industries Limited CITATION : 2025 TAXSCAN (AAR) 123

In a crucial determination affecting renewable energy deployments in industrial setups, the Tamil Nadu Authority for Advance Ruling (AAR) has ruled that M/s Kanishk Steel Industries Limited is not entitled to claim Input Tax Credit (ITC) on inputs, capital goods, or input services used in the design, engineering, and installation of a solar power plant.

The AAR clarified that exempt supplies attract the bar under Section 17(2) and Rule 43 of the CGST Rules, which mandate reversal or disallowance of ITC to the extent it is used for exempt activities. Since there was no wheeling or banking agreement, the arrangement was treated as a sale to TANGEDCO followed by an adjustment, further distancing it from captive use.

No Proportionate GST ITC Admissible for Supply of Steel, Cement and Installation Services Related to Gantry-Equipped Factory Construction: AAR

In Re: M/s.HMSU Rollers (India) Pvt. Ltd CITATION : 2025 TAXSCAN (AAR) 124

With regards to the applicability of Input Tax Credit ( ITC ) under GST ( Goods and Services Tax ) for factory construction-related activities, the Gujarat Authority for Advance Ruling (AAR) has held that no proportionate ITC is admissible for the supply of steel, cement, installation services, or capital goods used in the construction of an immovable property in the form of a gantry-equipped factory building.

The authority declined to accept the applicant’s argument that proportionate credit should be allowed on the weight contribution or functionality basis, noting that GST Act draws a clear distinction between movable equipment used for business and immovable civil constructions even if the latter contribute indirectly to business operations.

Inclusion of Free Scraping Tool in Apsara Oil Pastel Pack Is Separate Supply, Attracts 18% GST: AAR

In Re: M/s.Hindustan Pencils Private Limited CITATION : 2025 TAXSCAN (AAR) 125

The Gujarat Authority for Advance Ruling ( AAR ) has clarified that the inclusion of a free scraping tool in a pack of Apsara Oil Pastels constitutes a separate and independent supply under Section 7 of the CGST Act, 2017.

The authority, relying on Circular No. 92/11/2019-GST and the definitions under Section 2(74) of the CGST Act, the AAR concluded that the pack met the criteria of a mixed supply, i.e., two or more individual supplies packaged for a single price that are not naturally bundled.

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Only Supplier can File Advance Ruling: AAR Rejects Application of National Capital Region Transport Corporation Ltd

In Re: M/SNational Capital Region Transport Corporation Ltd. CITATION : 2025 TAXSCAN (AAR) 126

The Authority for Advance Ruling ( AAR ), Uttar Pradesh, rejected the application filed by National Capital Region Transport Corporation Ltd (NCRTC) stating that only the supplier can file for seeking advance ruling, not the recipient.

The application was beyond the permitted limits of the advance ruling since the NCRTC was getting goods or services in this case rather than providing them. Amit Kumar, I.R.S., and Harilal Prajapati's bench ruled that the applicant was not permitted to request an advance ruling since it was a recipient of PVVNL's services.

Recipient of Works Contract Services Not Eligible to Seek Advance Ruling u/s 97 of CGST Act: AAR Rejects Application

In Re: Sri. RNilakantan Iyer CITATION : 2025 TAXSCAN (AAR) 127

The Karnataka Authority for Advance Ruling (KAAR) has rejected an application for the advance ruling holding that a recipient of works contract services is not eligible to seek an advance ruling under Section 97 of the CGST ( Goods and Services Tax ) Act, 2017.

The AAR, in its detailed reasoning, referred to the definition of “advance ruling” under Section 95(a) of the CGST Act, which makes it clear that such a ruling can be sought only by a person undertaking or proposing to undertake the supply of goods or services or both.

Since the applicant was merely a recipient of services and not engaged in any form of supply, the authority concluded that the case was not maintainable.

No Advance Ruling on Decided Matters: AAR Dismisses Application by Karnataka State Nursing Council

In Re: M/s.KARNATAKA STATE NURSING COUNCIL CITATION : 2025 TAXSCAN (AAR) 128

In a recent decision, the Karnataka Authority for Advance Ruling ( KAAR ) ruled that the issue already adjudicated shall not be raised again before the authority.

The applicant, a non-profit organization registered under Section 12AB of the Income Tax Act and constituted under the Karnataka Nurses, Midwives and Health Visitors Act, had approached the AAR seeking clarity on the taxability of its services such as registration, renewal, foreign verification, and other administrative functions related to the nursing profession in Karnataka.

The bench of Prathap Kumar S and M.S. Prithvi invoked the first proviso to Section 98(2) of the CGST Act, 2017, which clearly bars admission of any advance ruling application if the matter is already pending or has been adjudicated in proceedings under the Act.

FTWZ Sales Not Supply Under GST, No IGST or Customs Applicable: AAR holds No Dual Registration Needed for Operations in Tamil Nadu

In Re: M/s.West Pharmaceutical Packaging CITATION : 2025 TAXSCAN (AAR) 129

With regards to the clarification on the taxability of Free Trade Warehousing Zone (FTWZ) operations under the GST Act, the Tamil Nadu Authority for Advance Ruling (AAR) has ruled that sales or transactions effected from an FTWZ unit do not constitute a “supply” under the provisions of the CGST Act, and therefore, are not liable to Integrated Goods and Services Tax (IGST) or customs duties.

The bench of B. Susee Kumar and Balakrishna S agreed with the applicant's stance and explained that, provided there is no movement for domestic use, FTWZ transactions including warehousing, repackaging, labeling, or subsequent exports do not qualify as "supply" under Section 7 of the CGST Act read with Schedule I or II. As a result, these activities are not covered by GST and are not subject to IGST or customs duties when they take place within the FTWZ.

Bus Transport Availed by Students and Staff on Hire is Not a Service Provided to the School: AAR Rules No GST Exemption

In Re: M/s.Batcha Noorjahan CITATION : 2025 TAXSCAN (AAR) 131

The Tamil NaduAuthority for Advance Ruling (AAR) held that transportation services paid for by students and staff on an individual basis, and not by the school itself does not qualify as services provided to the educational institution and thus are not eligible for Goods and Services Tax (GST) exemption.

The AAR Bench of Balakrishna S. (Member - CGST) and B. Suseel Kumar (Member - SGST) observed that while lease agreements existed, there was no monetary consideration provided by the school to the applicant. Furthermore, receipts produced by the applicant showed that they directly collected transport fees, along with GST from students under the trade name "School Transport".

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GST Relief for Used Machinery Dealers: Gujarat AAR Allows Margin Scheme for Second-Hand Goods Under Same Registration

In Re: Jitendraequipment CITATION : 2025 TAXSCAN (AAR) 132

In a significant decision, the Gujarat Authority for Advance Ruling (AAR) has provided clarity on the applicability of the margin scheme under GST for dealers of second-hand machinery. The ruling allows businesses to adopt the margin scheme for used goods while continuing regular GST practices for their existing trade under the same registration.

The bench, comprising Member (SGST) Kamal Shukla and Member (CGST) P.B. Meena, emphasized that the margin scheme aims to prevent double taxation, as second-hand goods have already borne tax in their initial supply. The ruling provides much-needed clarity for dealers navigating the complexities of GST compliance in the used machinery market.

No 12% GST for Rice Husk Boards! AAR Rejects Vegan Wood's Classification Under Wood Chapter, Cites Missing Lab Reports & Documentation

In Re:M/s.Vegan Wood Pvt Ltd CITATION : 2025 TAXSCAN (AAR) 133

In a setback for manufacturers of eco-friendly building materials, the Gujarat Authority for Advance Ruling (AAR) has denied 12% GST classification to rice husk boards under the wood products category, citing insufficient technical documentation and unverified lab reports. The ruling highlights the challenges in classifying composite materials under traditional GST slabs.

Members Kamal Shukla (SGST) and P.B. Meena (CGST) emphasized that composite materials require rigorous technical proof to qualify for wood product classification. The ruling leaves Vegan Wood's rice husk boards subject to the default 18% GST rate for manufactured goods unless the company furnishes stronger evidence.

GST Win for Pharma Giant: AAR Allows ITC on Mandatory Canteen Services Under Factories Act

In Re: M/s.Amneal Pharmaceuticals Pvt. Limited CITATION : 2025 TAXSCAN (AAR) 134

In a key decision for employers, the Gujarat Authority for Advance Ruling (AAR) has allowed input tax credit (ITC) on GST paid for mandatory canteen services provided to employees under the Factories Act. The ruling benefits companies legally required to run staff canteens, clarifying that such expenses qualify for tax credits under GST laws.

The bench, comprising Member (SGST) Kamal Shukla and Member (CGST) P.B. Meena, underscored that the 2019 amendment to Section 17(5)(b) and subsequent CBIC guidance explicitly support ITC for employer-mandated benefits. The decision provides much-needed clarity for manufacturers, especially in sectors like pharmaceuticals, where large factories must operate canteens under labor regulations.

No GST on Scanning and Processing of Examination Results for Educational Institutions: AAR

In Re: MEHRACOMPUTER SYSTEMS LIMITED. CITATION : 2025 TAXSCAN (AAR) 135

The Tamil Nadu Authority for Advance Ruling (AAR) recently held that services such as scanning and processing of examination results for educational institutions shall be exempt from the levy of Goods and Services Tax (GST).

The Bench comprising Balakrishna S (CGST Member) and B. Suseel Kumar (SGST Member) noted that the nature of the service involved specialized processing using inputs and raw data provided by educational boards. Relying on Circular No. 151/07/2021-GST dated 17.06.2021, the Authority highlighted that services related to conducting examinations, such as online testing, result publication and scanning of responses are exempt under GST when provided to recognised educational institutions.

No GST on Printing Post-Examination Items like Mark Sheets, Degree Certificates, Grade and Rank Sheets, Rank Cards & Certificates for Educational Institutions: AAR

In Re: MEHRACOMPUTER SYSTEMS LIMITED. CITATION : 2025 TAXSCAN (AAR) 135

The Tamil Nadu Authority for Advance Ruling (AAR) recently held that services such as printing post-examination items like mark sheets, degree certificates, grade sheets, rank cards and other related documents, when rendered to educational institutions, shall be exempt from the levy of Goods and Services Tax (GST).

The Bench referred to Circular No. 151/07/2021-GST dated 17.06.2021 which clarified that input services relating to conducting examinations, including publication of results, printing of mark sheets and certificates are exempt when supplied to educational institutions.

No GST on Printing Pre-Examination Items like Hall Tickets, Question Paper, OMR Sheets, Answer Booklets for Educational Institutions: AAR

In Re: MEHRACOMPUTER SYSTEMS LIMITED. CITATION : 2025 TAXSCAN (AAR) 135

The Tamil Nadu Authority for Advance Ruling (AAR) recently held that services such as printing pre-examination items such as hall tickets, question papers, OMR sheets and answer booklets when rendered to educational institutions shall be exempt from the levy of Goods and Services Tax (GST).

The Bench of Balakrishna S (CGST Member) and B. Suseel Kumar (SGST Member) observed that the applicant prints pre-examination items on their own paper and ink, on the basis of content supplied by educational boards. Citing Circular No. 151/07/2021-GST dated 17.06.2021, the AAR emphasized that input services relating to admission or conduct of examination including printing of question papers and admit cards are exempt when provided to educational institutions.

Time Limit to Avail ITC of Import IGST paid via Re-assessed Bill of Entry is governed by Section 16(4) CGST Act: AAR in Becton, Dickinson India’s Case

In Re: M/s.Becton Dickinson India Private Limited CITATION : 2025 TAXSCAN (AAR) 136

The Tamil Nadu Authority for Advance Ruling (AAR) considered the eligibility to claim input tax credit (ITC) for import Integrated Goods and Services Tax (IGST) paid through reassessed bills of entry. The Authority held that the availing of ITC on import IGST based on a re-assessed bill of entry is governed by the time limit as prescribed under Section 16(4) of the Central Goods and Services Tax (CGST) Act, 2017.

The Authority bench comprising Balakrishnan S (CGST Member) and B Suseel Kumar (SGST Member) held that the time limit for availing ITC would ideally begin from the date of re-assessment of bill of entry, as the payment of differential duties of customs including IGST, is necessitated only when an upward price revision takes place at a later date.

In conclusion, the AAR ruled that in cases where the applicant paid import IGST through a re-assessed bill of entry, the time limit to avail ITC is governed by Section 16(4) of the CGST Act, and this limitation period commences from the date of the re-assessment and not the date of the original bill of entry.

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