AAR and AAAR Weekly Round Up
Read on to know the recent AAR and AAAR matters covered at taxscan.in
This round-up analytically summarises the key rulings of 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 August 16, 2025 to September 13, 2025.
Market Leasing by Panchayat is a Constitutional Function, not Supply of Goods/Services under GST: AAR
In Re: M/s.KANNIVADI TOWN PANCHAYAT CITATION : 2025 TAXSCAN (AAR) 150
The Tamil Nadu Authority for Advance Ruling (AAR) has clarified that leasing of weekly market rights by a Panchayat to tender contractors for collection of entry fees is neither a supply of goods nor a supply of services under the Goods and Services Tax (GST) framework. The ruling provides significant relief to local bodies engaged in market administration, confirming that such activities fall squarely within constitutional functions entrusted to Panchayats.
The authority bench, comprising Balakrishna S, Member (CGST) and B. Suseel Kumar, Member (SGST), ruled that the leasing activity constituted a function entrusted to a Panchayat under Article 243G. Accordingly, it held that such transactions fall within the scope of Notification 14/2017-CT(Rate), as amended, and are to be treated as activities that are “neither supply of goods nor supply of services.”
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PVC Raincoats Classified as Plastic Articles Not Textiles, Attract 18% GST: AAR
In Re:WATERPROOF PRODUCTS MANUFACTURERS & TRADERS WELFARE ASSOCIATIONCITATION : 2025 TAXSCAN (AAR) 151
The West Bengal Authority for Advance Ruling (AAR) held that raincoats made of polyvinyl chloride (PVC) sheeting are to be classified as plastic articles and not as textile garments. Such raincoats will attract Goods and Services Tax (GST) at the rate of 18%.
The bench comprising Mr. Susanta Kumar Maity (Joint Commissioner, State Tax) and Mr. Joyjit Banik (Senior Joint Commissioner, CGST & CX) observed that PVC sheets are produced by polymerisation and calendaring, without generating fibres, filaments or yarns. So, PVC sheeting cannot be considered a textile material.
Housekeeping Services to IIITDM Not Exempt from GST being unrelated to Sanitation/Solid Waste Management: AAR
In Re: M/s. Srinacss Enviro Private Limited CITATION : 2025 TAXSCAN (AAR) 152
The Tamil Nadu Authority for Advance Ruling (AAR) has held that housekeeping and cleaning services provided to the Indian Institute of Information Technology, Design and Manufacturing (IIITDM), Kancheepuram, are not exempt from Goods and Services Tax (GST).
The AAR bench, comprising Balakrishna S (Member, CGST) and B. Suseel Kumar (Member, SGST), examined the matter in detail. It noted that the exemption under Notification 13/2023 applies only to services provided to a “Governmental Authority” relating to water supply, public health, sanitation conservancy, solid waste management, and slum improvement.
Not lawful for Applicant to raise invoice without GST for Housekeeping Services to IIITDM: AAR
In Re: M/s. Srinacss Enviro Private Limited CITATION : 2025 TAXSCAN (AAR) 152
The Tamil Nadu Authority for Advance Ruling (AAR) has ruled that housekeeping and cleaning services provided to the Indian Institute of Information Technology, Design and Manufacturing (IIITDM), Kancheepuram, are not exempt from Goods and Services Tax (GST). The ruling clarifies that invoices for such services must include GST, despite IIITDM’s request to the contrary.
It was thus ruled by the bench, consisting of Balakrishna S (Member, CGST) and B. Suseel Kumar (Member, SGST) that Housekeeping/cleaning services provided to IIITDM are taxable under GST. It was further ruled that such services cannot be equated with sanitation or solid waste management. It was thus ruled that it is not lawful for the applicant to raise invoices without charging GST.
Supply of Medicines to In-patients by Pharmacy amounts to Composite Supply, exempt from GST: AAR
In Re: M/s.Maha Critical Speciality Division CITATION : 2025 TAXSCAN (AAR) 153
The Tamil Nadu Authority for Advance Ruling (AAR) has held that the supply of medicines and consumables to in-patients during their admission in a hospital constitutes a composite supply of healthcare services and is exempt from the Goods and Services Tax (GST). The ruling provides clarity on a recurring compliance question for hospitals regarding the taxability of pharmacy supplies made to admitted patients.
The bench, comprising Balakrishna S (Member, CGST) and B. Suseel Kumar (Member, SGST), ruled that supplies of medicines and consumables to in-patients are naturally bundled and supplied in conjunction with healthcare services, making them a composite supply. The principal supply in such cases remains healthcare, which is exempt under Entry 74 of Notification 12/2017-CT(Rate) and the corresponding Tamil Nadu notification.
Groundnuts Heated for Storage/Transport Cannot Be Classified under ‘Groundnuts, Not Roasted or Cooked’: AAR
In Re: M/sSITARAM KUMHAR CITATION : 2025 TAXSCAN (AAR) 154
The Rajasthan Authority for Advance Ruling (AAR) has held that groundnuts with shell subjected to heating for reducing moisture content so as to make them suitable for storage and transportation cannot be classified under HSN 1202, which covers “Groundnuts, not roasted or otherwise cooked, whether or not shelled or broken”.
The authority noted that the applicant had not provided details of the heating process, equipment, or safeguards to show that no structural change occurred. Therefore, it ruled that groundnuts subjected to heating cannot be considered “not roasted or otherwise cooked” and hence fall outside HSN 1202.
Accordingly, the bench of Mahipal Singh and Dr. Akhedan Charan ruled that heating of groundnuts with shell to reduce water content for storage and transportation makes them ineligible to be classified under HSN 1202.
28% GST leviable on Interactive Flat Panels by Acer: AAR
In Re: M/s.Acer India Private Limited CITATION : 2025 TAXSCAN (AAR) 155
The Tamil Nadu Authority for Advance Ruling (AAR) has held that Interactive Flat Panels (IFPs) supplied by Acer India Pvt. Ltd. will attract 28 percent Goods and Services Tax (GST).
It was observed that the features of an IFPD enumerated in the circular is not restrictive as claimed by the applicant, but throws light on the major differences between IFPD and the monitors for the purpose of classification as the rate of tax for both the products are different. Therefore, the features of IFPD listed in the circular shall not be compared with an ADP machine, as the intended purpose of ADP machine is different from IFPDs.
It was thus ruled by the authority bench of SGST Member B Susheel Kumar and CGST Member C Thiagarajan that Various models of ACER Interactive flat Panels with additional features are still classifiable under 85285900 and that the applicable rate of GST is 28%.
Grounds Incomplete and Vague: AAR Dismisses Advance Ruling Request on DM Water, Distil Water & Conductive Water
In Re: M/s.Royal Enterprise CITATION : 2025 TAXSCAN (AAR) 156
The Gujarat Authority for Advance Ruling (AAR) has dismissed an application seeking a classification and GST ( Goods and Services Tax ) rate ruling on commodities such as DM Water, Distil Water, and Conductive Water, holding that the request was vague, incomplete, and lacked the requisite details mandated under law.
The bench of Kamal Shukla and P.B. Meena, stating Section 98(2) of the CGST Act, 2017, which empowers the Authority to reject applications that are incomplete or deficient, the AAR observed that the absence of primary details made it impossible to adjudicate the classification or rate of tax issue raised.
Accordingly, the bench rejected the application in its entirety, ruling that an advance ruling cannot be sought on vague and unsubstantiated grounds.
Bangalore Metro Rail Corporation not qualified to be a ‘Government Authority’ under GST: AAR
In Re: M/s.BANGALORE METRO RAIL CORPORATION LIMITED CITATION : 2025 TAXSCAN (AAR) 157
The Karnataka Authority for Advance Ruling (AAR) has held that Bangalore Metro Rail Corporation Limited (BMRCL) does not qualify as a “Government Authority” under Paragraph 2(zf) of Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017. Consequently, the activity of granting concession rights to private developers for metro station development is not exempt from Goods and Services Tax (GST).
The AAR bench of Members Prathap Kumar S and Kalyanam Rajesh Rama Rao concluded that since BMRCL failed to meet the fundamental condition of being a Government Authority, the question of GST exemption on concession fees did not arise. Accordingly, it ruled that GST would apply to the ₹100 crore concession paid by the concessionaire.
Market Led Fee based Services Scheme not exigible to GST: AAR
In Re: M/s.SISINTY PRIVATE LIMITED CITATION : 2025 TAXSCAN (AAR) 158
The Karnataka Authority for Advance Ruling (AAR) has ruled that training services delivered under the Market Led Fee-based Services Scheme of the National Skill Development Corporation (NSDC) are not exigible to Goods and Services Tax (GST).
On examination of the documents placed on record, the authority found that Sisinty Private Limited was duly recognised as a training partner and that the Market Led Fee-based Services Scheme was indeed an NSDC-implemented programme. Both statutory conditions for exemption--approval by NSDC and service delivery under an NSDC scheme were therefore satisfied.
As a result, the AAR Bench of the Bench comprising Additional Commissioners Prathap Kumar S (State) and Kalyanam Rajesh Rama Rao (Central) held that no GST is payable on the services provided by Sisinty Private Limited under the Market Led Fee-based Services Scheme.
Commission on Selling arrangement for Promoting, Marketing and Selling of Birds and Handling Sale Administration Not Exempted from GST: AAR
In Re: M/s.VENKATESHWARA HATCHERIES PRIVATE LIMITED CITATION : 2025 TAXSCAN (AAR) 159
The Maharashtra Authority for Advance Rulings ( AAR ) has held that the 10% commission received for promoting, marketing, and selling birds, as well as handling sale administration, is not exempted from Goods and Services Tax ( GST ) as per entry number 54 of notification number 12/2017-Central Tax (Rate) dated 28 June 2017.
As such, the exemption available to commission agents dealing with agricultural produce was held to be inapplicable. Instead, the commission for these services was classified as taxable under Service Accounting Code (SAC) 9961/9997, which attracts GST at the standard rate of 18%.
The bench of D.P. Gojamgunde and Priya Jadhav also rejected the argument that the reverse charge mechanism (RCM) could apply, clarifying that since birds are not agricultural produce, the liability to pay GST on such commission rests with the service provider and not the recipient.
Commission on Selling arrangement for Promoting, Marketing and Selling of Birds and Handling Sale Administration Not Exempted from GST: AAR
"In Re:M/s. VENKATESHWARA HATCHERIES PRIVATE LIMITED"CITATION : 2025 TAXSCAN (AAR) 160
The Maharashtra Authority for Advance Rulings (AAR) has held that the 10% commission received for promoting, marketing, and selling birds, as well as handling sale administration, is not exempted from Goods and Services Tax ( GST ) as per entry number 54 of notification number 12/2017-Central Tax (Rate) dated 28 June 2017.
The bench of D.P. Gojamgunde and Priya Jadhav also rejected the argument that the reverse charge mechanism (RCM) could apply, clarifying that since birds are not agricultural produce, the liability to pay GST on such commission rests with the service provider and not the recipient.
Application seeking Applicability GST on Availing the facility of canteen at the office premises: AAR Disposes of as withdrawn
In Re: M/s.WABTEC INDIA INDUSTRIAL PRIVATE LIMITED CITATION : 2025 TAXSCAN (AAR) 161
The Karnataka Authority for Advance Ruling(AAR) disposed of the application filed seeking the applicability of Goods and Services Tax(GST) on availing the facility of a canteen at the office premises.
The applicant has sought advance ruling that whether GST is applicable on recovery of nominal amount for availing the facility of canteen at the office premises when it is not a supply as per clause 1 of Schedule 111 of CGST Act?
The GST applicability on payment of notice pay by an employee to the Applicant-employer in lieu of notice period, under clause 5(e) of Schedule 11 of CGST Act and on the amount of premium of Medical Insurance Policy for the employees and their dependents at actuals covered under the HR Policy.
Supply and Installation of artificial turf/artificial grass in nature of works contract exigible to18% GST: AAR
In Re: M/s. NEWHORIZON DEVELOPMENT COMPANY PRIVATE LIMITED CITATION : 2025 TAXSCAN (AAR) 162
The Karnataka Authority for Advance Ruling(AAR) has ruled that supply and installation of artificial turf/artificial grass in the nature of works contract and are exigible to 18% GST.
It was observed that the applicant intends to classify the supply Of the impugned product and its installation as works contract, under SAC code 995427. The issue involves classification of the service and thus; we invite reference to Explanation (ii) at para 4, of the Notification No. 11/2017- Central Tax (Rate), dated 28.06.2017,
The two member bench of Prathap Kumar S, Member (State) and Kalyanam Rajesh Rama Rao, Member (Central) held that the supply and installation of artificial turf/artificial grass and other sports flooring in the nature of works contract merits classification under SAC 9854 and is exigible to GST @ 18% in terms of entry No, 3(xii) of the Notification No. 1 1 / 2017-central Tax (Rate) dated 2806.2017.
AAR Rules Property Survey & Tax Assessment Services Not Covered as Municipal Functions Under Article 243W Twelfth Schedule
In Re: M/s.STHAPATYA CONSULTANTS (INDIA) PRIVATE LIMITED CITATION : 2025 TAXSCAN (AAR) 163
The Maharashtra bench of the Authority for Advance Ruling (AAR) ruled that property survey and tax assessment services provided by M/s. Sthapatya Consultants (India) Private Limited, to municipal corporations and councils, do not qualify as municipal functions under Clauses 1 & 2 of the Twelfth Schedule of Article 243W of the Constitution of India
The bench comprising D.P. Gojamgunde (State Member) and Priya Jadhav (Central Member) observed that the levy of property tax is a mandatory function for municipal councils as per the Maharashtra Municipal Act. However, it is not listed as one of the functions in the Twelfth Schedule of Article 243W of the Constitution.
AAR Clarifies GST Exemption Under Notification No. 12/2017 Not Available for Pure Labour Services in Property Survey and Tax Assessment
In Re: M/s.STHAPATYA CONSULTANTS (INDIA) PRIVATE LIMITED CITATION : 2025 TAXSCAN (AAR) 163
The Maharashtra bench of the Authority for Advance Ruling (AAR) considered an application by Sthapatya Consultants (India) Private Limited seeking clarification on the applicability of GST exemption under Notification No. 12/2017–Central Tax (Rate), Entry 3, to pure labour services relating to property survey and tax assessment provided to municipal corporations and councils.
The AAR observed that the function of levy of property tax may be mandatory and necessary for the functioning of the Municipal Councils. However, it is not listed as one of the functions in the twelfth Schedule of Article 243W of the Constitution. It was concluded that the said function does not fall under Article 243G or 243W of the Constitution, and therefore, the applicant is not entitled to the benefit of Notification No. 12/2017-CT (Rate) Dated 28/06/2017 as amended from time to time.
GST on Interest under Annuity Model: AAR Holds Deferred Payment Interest Taxable as Part of Supply Value u/s 15(2)(d)
In Re: M/s.SHENWA INFRASTRUCTURE PRIVATE LIMITED CITATION : 2025 TAXSCAN (AAR) 164
The Maharashtra bench of the Authority for Advance Ruling (AAR) involved an application by Shenwa Infrastructure Private Limited, seeking clarity on the GST implications of interest received on deferred payment in Equated Yearly Installments (EYI) as per the tender terms under the Annuity Model. The applicant specifically sought a ruling on whether such interest is liable to GST, and if so, the classification and applicable rate of GST.
The bench comprising D.P. Gojamgunde (State Member) and Priya Jadhav (Central Member) stated, “With all these proceedings, we have to find out whether interest receivable is a part of taxable supply.” Referring to Section 15(2)(d) of the GST Act, the Authority observed that the value of supply shall include interest or late fee, or penalty for delayed payment of any consideration for any supply.
GST Rate on Interest Component: AAR Confirms Interest Follows Classification of Road Works Contract, Taxed at Same Rate as Principal Supply
In Re: M/s.SHENWA INFRASTRUCTURE PRIVATE LIMITED CITATION : 2025 TAXSCAN (AAR) 164
The Maharashtra bench of the Authority for Advance Ruling (AAR) involved an application by Shenwa Infrastructure Private Limited, the applicant, seeking an advance ruling in respect of the classification of service and the applicable rate of GST payable.
The bench comprising D.P. Gojamgunde (State Member) and Priya Jadhav (Central Member) ordered that the service is classified the same as that of the original taxable supply of services of construction of road and maintenance, and the applicable rate of GST shall be the same as that of the original taxable supply.
Accordingly, AAR held that the interest component in deferred annuity payments under the Hybrid Annuity Model is taxable as part of the value of supply under Section 15(2)(d). It shall be subject to GST at the same rate and classification as the principal road works contract.
AAR Clarifies Tie-in Pipeline Outside Factory Premises Ineligible for ITC under Section 17(5)(c): Not Covered as “Plant and Machinery”
M/s. H-Energy Gateway Pvt. Ltd. CITATION : 2025 TAXSCAN (AAR) 165
The Maharashtra bench of the Authority for Advance Ruling (AAR) held that H-Energy Gateway Pvt. Ltd. is not eligible to avail input tax credit (ITC) on goods and services used for the construction of its Tie-in Pipeline connecting a Floating Storage Regasification Unit (FSRU) to the National Grid as the pipeline is excluded from the definition of "plant and machinery" under Section 17(5)(c) of the Central Goods and Services Tax (CGST) Act, 2017.
Accordingly, the AAR concluded that the applicant is not entitled to avail ITC of GST paid on goods and services used for construction of the Tie-in Pipeline from the FSRU to the National Grid, since under Section 17(5)(c) of the CGST Act, 2017, as pipelines laid outside factory premises are expressly excluded from the definition of “plant and machinery
Thus, the AAR clarified, a Tie-in Pipeline laid outside factory premises is ineligible for ITC under Section 17(5)(c) as it is not covered as ‘plant and machinery’.
Safari Retreats Functionality Test Overridden by Retrospective Amendment to Section 17(5)(d): AAR Denies Pipeline ITC Despite Essential Business Use
M/s. H-Energy GatewayPvt. Ltd. CITATION : 2025 TAXSCAN (AAR) 165
The Maharashtra bench of the Authority for Advance Ruling (AAR) considered the applicant’s claim for input tax credit (ITC) on the construction of the Tie-in Pipeline for delivery of regasified Liquefied Natural Gas (LNG) from its Floating Storage Regasification Unit (FSRU) terminal to the National Grid.
Accordingly, the bench comprising D.P. Gojamgunde (State Member) and Priya Jadhav (Central Member) ordered that the applicant is not entitled to avail the ITC of GST paid on goods and services used for construction of Tie-in Pipelines, from the FSRU to the National grid as per the provision laid out in section 17(5)(d) of the CGST Act, 2017, as amended by the Finance Act 2025.
28% GST Plus Compensation Cess Made Applicable on Chewing Tobacco: AAR Holds Mixing Lime is GST Taxable as Manufacture
In Re: ZenTobacco Private Limited CITATION : 2025 TAXSCAN (AAR) 166
In recent, the Gujarat Authority for Advance Ruling (AAR) held that “sada tambaku pre-mixed with lime” amounts to “chewing tobacco” and not “unmanufactured tobacco.” The decision settles the dispute over whether the process of mixing lime with raw tobacco is sufficient to bring the product under the category of manufacture.
The bench comprises Kamal Shukla (State Member) and P.B. Meena (Central Member) observed that unmanufactured tobacco under HSN 2401 refers only to raw or natural tobacco. By the applicant’s own admission, the tobacco leaves were never consumed directly but became fit for chewing only after lime was mixed. This resulted in a product with a distinct name, character, and use of hallmarks of “manufacture” under the GST law.
Accordingly, the AAR ruled that “sada tambaku pre-mixed with lime” is classifiable as “chewing tobacco” under HSN 24039910. It held that GST at 28% (14% CGST + 14% SGST) applies, along with compensation cess at 0.56R per unit for declared retail sale price, or 160% in other cases. The Authority rejected the applicant’s contention and confirmed that mixing lime constitutes manufacture for GST purposes.
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