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 September 13, 2025 to November 1, 2025.
AAR rejects Advance Ruling application on Waste Management Service Classification as Issue already Pending in Tax Proceedings
CITATION : 2025 TAXSCAN (AAR) 173
The Tamil Nadu Authority for Advance Ruling (AAR) has rejected an application seeking clarification on the classification and GST exemption for solid waste management services, as the issue was already pending in tax assessment proceedings.
The Authority, comprising Shri C. Thiyagarajan, Member (CGST) and Shri B. Suseel Kumar, Member (SGST), did not decide the case on its merits. Instead, it focused on the admissibility of the application under Section 98(2) of the CGSTAct, 2017. The provision bars the AAR from admitting an application if the 'question raised... is already pending or decided in any proceedings' against the applicant.
The Authority observed that the tax department had initiated proceedings against the applicant much earlier, with an intimation (DRC-OIA) issued on 22-03-2024 and a subsequent assessment order confirming demand. The applicant filed the AAR application on 11-02-2025, nearly a year after the department's proceedings had begun. The AAR noted that the issue in the department's assessment (taxability of the declared turnover) was the same as the question raised in the advance ruling application (classification and eligibility for exemption).
GST Applicability on Non-Electronic Children’s Toys: AAR Disposes Application as Withdrawn After Internal Resolution
In Re:.M/s. Stemplay LabsPrivate Limited
CITATION : 2025 TAXSCAN (AAR) 174
The Tamil Nadu bench of Authority of Advanced Ruling (AAR) disposes of the Goods and Service Tax ( GST ) application on non-electronic children’s toys as withdrawn after an internal resolution.
The AAR Authority consisting of C Thiyagarajan (CGST) and B.Suseel Kumar (SGST) noted the applicant’s letter dated 23.04.2025, in which they withdrew their advance ruling application and decided not to proceed further. The Authority considered the request and disposed of the application as withdrawn without examining the merits or detailed facts of the case.
Accordingly, the advance ruling application submitted by the applicant on 10.03.2025 was treated as withdrawn in line with the applicant’s request.
Classification of Imported Goods Falls Under Customs Authority Ruling: AAR
In Re: M/s. Sundaram IndustriesPrivate Limited
CITATION : 2025 TAXSCAN (AAR) 175
The Tamil Nadu Authority for Advance Ruling (AAR) has ruled that the classification of imported input goods falls outside the jurisdiction of the GST Authority for Advance Ruling and that the Customs Authority must address such matters for Advance Ruling.
The Authority clarified that its jurisdiction is limited to matters relating to the “outward supply” of goods or services by the applicant. Classification of “inward supplies” (imported goods), including the assessment of duties and IGST at the time of import, vests with the Customs Department. Consequently, the Customs Authority for Advance Ruling (CAAR) was identified as the proper forum to address the applicant's query.
The bench clarified the jurisdictional boundaries between the GST and Customs Authorities for Advance Ruling, specifically noting that classification issues related to imported goods are not within the purview of the GST AAR.
ONGC’s MGO Charges from GAIL for Gas Shortfall not Subject to GST: AAR
In Re: M/s. OIL AND NATURAL GASCORPORATION LIMITED
CITATION : 2025 TAXSCAN (AAR) 176
The Tamil Nadu bench of Authority of Advanced Ruling (AAR), held that Oil and Natural Gas Corporation (ONGC)’s Minimum Guaranteed Off-take (MGO) charges collected from Gas Authority of India Limited (GAIL) for shortfall in gas off-take were not subject to Goods and Service Tax (GST).
The AAR bench composed of B.Suseel Kumar (SGST) and C.Thiyagarajan (CGST) examined the advance ruling application, the additional submissions made during the personal hearing on 24.07.2025, and documents submitted later via email. The applicant had imposed MGO Charges on M/s. GAIL if they failed to off-take 90% of the contracted quantity quarterly. These charges were adjusted annually based on the Adjusted Annual Contract Quantity, with any excess refunded as per the Gas Sales and Transportation Agreement (GSTA).
AAR Classifies Fish Processing as 'Job Work', Attracting 5% GST Rate
In Re: M/s. JUDE FOODS INDIAPRIVATE LIMITED
CITATION : 2025 TAXSCAN (AAR) 177
In a significant clarification on the tax treatment of seafood handling, the Tamil Nadu Authority for Advance Ruling (AAR) has delineated that comprehensive fish processing activities undertaken on goods owned by another entity qualify as 'job work' for the purposes of the Goods and Services Tax (GST). The ruling definitively states that such services will attract a consolidated GST rate of 5 percent, applicable from October 13, 2017. This decision provides much-needed clarity for a niche segment of the food processing industry, outlining the specific conditions under which this tax rate applies and cementing the classification of these activities under the service tax umbrella.
The bench, led by members Balakrishna. S and B. Sussel Kumar, concluded that the specific tax demands previously raised against the company on the GST portal were unrelated to the core question of service classification and, therefore, did not influence their ruling on the matter. This focused approach ensures the advance ruling is based solely on the nature of the activity presented.
Sale of Buildings on Leased Land Deemed a Taxable Service, Not a Sale, in Major AAR
In Re: M/s. General Motors IndiaPrivate Limited
CITATION : 2025 TAXSCAN (AAR) 178
In a significant ruling that clarifies the tax treatment of property transactions involving leased land, the Maharashtra Authority for Advance Ruling (AAR) has held that the transfer of buildings constructed on leased land constitutes a taxable service under the Goods and Services Tax (GST) regime, and not a sale of immovable property. This decision means such transactions will attract GST at 18%, diverging from the common industry practice of treating them as non-taxable sales.
The AAR classified this service under SAC 999792 (Other miscellaneous services) and held it taxable at 18% under the GST law. It distinguished this from the sale of a building by an owner, which can be non-taxable, clarifying that the critical factor is the nature of the rights being transferred, not the physical asset itself. The ruling reinforced its view by referencing the Bombay High Court's decision in the Builders Association of India case (2018), where the court upheld that long-term lease premiums are consideration for a taxable service of leasing.
Staffing Firms Must Pay GST on Trainee Stipends, Rules AAR, Denying Pure Agent Claim
In Re: M/s shri. Balakrishan S
CITATION : 2025 TAXSCAN (AAR) 179
In a significant ruling that clarifies the tax treatment of stipend payments, the Tamil Nadu Authority for Advance Ruling (AAR) has held that amounts received by a staffing firm from corporate clients for disbursement as trainee stipends are subject to Goods and Services Tax (GST). The AAR rejected the applicant's claim to be treated as a 'pure agent', a status that would have excluded these amounts from the taxable value of their services.
The ruling was delivered by a bench comprising Balakrishna S, I.R.S., Additional Commissioner (CGST), and B. Suscel Kumar, Joint Commissioner (SGST). The AAR refrained from answering a third, more generic question from the applicant regarding the interpretation of law, stating that such queries fall outside the specific scope of questions permissible for an advance ruling under the GST law. This decision provides crucial clarity for the staffing and skill development industry, establishing that stipend flows are part of the taxable service value unless all stringent conditions of a pure agent are met.
AAR Bars ITC on Clinical Trial Imports, Says Free Drugs Are Not Business Supply
In Re: M/s. PPD PharmaceuticalDevelopment India Private Limited
CITATION : 2025 TAXSCAN (AAR) 180
In a significant ruling that clarifies the scope of input tax credit (ITC) under the Goods and Services Tax (GST) regime, the Maharashtra Authority for Advance Ruling (AAR) has held that a company importing sample drugs for clinical trials cannot claim ITC on the Integrated GST (IGST) paid on the import or on the GST paid for ancillary services. The authority ruled that since the drugs are supplied to hospitals and clinics free of cost for trials, they are considered "free samples," and the tax paid on their import and clearance is not available as credit.
The AAR referenced the CBIC Circular No. 92/11/2019-GST, which clarifies that goods supplied without consideration do not constitute a 'supply' under GST, except in specific schedule I activities, and that ITC is not available on inputs used for such free samples. The bench noted that the non-obstante clause in Section 17(5) overrides the general eligibility for ITC under Section 16(1). Consequently, the denial of ITC was extended to the taxes paid on the CHA and logistics services, as these services were used for the ultimate disposal of the drugs as free samples. The authority also cited a ruling involving Indian Oil Corporation to reinforce that ITC is not available on input services used for making non-taxable supplies.
The bench, presided over by D.P. Gojamgunde and Priya Jadhav, therefore answered all three questions posed by PPD Pharmaceutical Development India Private Limited in the negative, barring the company from availing any of the disputed input tax credits.
AAR Says Honeycomb Packaging is 'Corrugated Paperboard', Rejects 'Other Article' Classification
In Re: M/s V.M. Technocoatings
CITATION : 2025 TAXSCAN (AAR) 181
In a significant clarification on the tax treatment of specialized packaging materials, the Uttar Pradesh Authority for Advance Ruling (AAR) has determined that paper honeycomb sheets and paper edge protectors should be classified as 'corrugated paperboard' under the Goods and Services Tax (GST) regime. The ruling rejects the classification of these products as 'other articles of paper', a distinction that directly impacts the applicable GST rate. The decision provides much-needed clarity for manufacturers in the packaging industry who have faced ambiguity regarding the tax rate for these eco-friendly packaging solutions.
The two-member bench, comprising Amit Kumar, Additional Commissioner (Central Tax), and Harilal Prajapati, Joint Commissioner (State Tax), unanimously ruled in favour of the applicant. The AAR officially declared that the correct HSN code for paper honeycomb sheets and paper edge protectors is 4808 90 00. This ruling is binding within the jurisdiction of Uttar Pradesh and is subject to appeal within 30 days.
AAR Rules GST Credit on Mandatory Canteen Services is Legal, But It's Only for Direct Employees
In Re: M/s. M/s Elentec India Private Limited
CITATION : 2025 TAXSCAN (AAR) 182
In a significant ruling that clarifies the availability of input tax credit (ITC) on employee welfare services, the Authority for Advance Ruling (AAR) in Uttar Pradesh has held that companies can claim GST credit on canteen services provided they are mandated by law. However, this benefit is strictly limited to direct, on-roll employees and cannot be extended to contractual workers. This decision provides much-needed clarity on the application of a key provision in the GST law concerning employer obligations.
The ruling was delivered by a two-member bench consisting of Shri Amit Kumar and Shri Harilal Prajapati. This decision provides a clear, albeit narrow, pathway for manufacturing units to avail GST credits on mandatory canteen services, while simultaneously drawing a firm line on employee eligibility and cost-bearing, ensuring compliance is strictly interpreted.
GST Hits Shrimp Exporters as AAR Says Small Packaged Units Are Taxable Retail Goods
In Re: M/S Sprint Exports PvtLtd
CITATION : 2025 TAXSCAN (AAR) 183
In a significant ruling that impacts the seafood export industry, the Authority for Advance Ruling (AAR) in Andhra Pradesh has determined that processed frozen shrimp, when exported in small pre-packaged and labelled units, are subject to the Goods and Services Tax (GST). This decision clarifies that the taxability of such goods is based on the nature of the packaging and not on their final destination, meaning exports are not automatically exempt.
The bench, comprising K. Ravi Shankar and B. Lakshmi Narayana, ruled affirmatively on both questions posed by the exporter, confirming that their packaged shrimp exports are indeed subject to GST. This ruling brings clarity to the tax treatment of exported packaged food items and establishes that the export status of a good does not override the tax implications of its retail-level packaging.
Rooftop Solar EPC Categorized as Works Contract: AAR rules GST Applicable on Entire Gross Contract Value
CITATION : 2025 TAXSCAN (AAR) 184
The bench of the West Bengal Authority for Advance Ruling (AAR) ruled that the supply of components of a rooftop solar power plant along with design, installation, testing, and commissioning constitutes a composite supply in the nature of a works contract, with the applicable Goods and Services Tax to be levied on the entire gross contract value.
The bench comprising of Dr. Tanisha Dutta, Joint Commissioner and Jaydip Kumar Chakrabarti, Senior Joint Commissioner held that the supply undertaken is a composite supply in the nature of a works contract, since the rooftop solar power plant, when installed, becomes an immovable property due to the degree of fastening and permanence of attachment to the structure. Accordingly, the entire supply is treated as a supply of service.
AAR affirms 70:30 Valuation Split for Solar EPC Works Contract
CITATION : 2025 TAXSCAN (AAR) 184
The bench of the West Bengal Authority for Advance Ruling (AAR) ruled that in the case of rooftop solar Engineering, Procurement, and Construction (EPC) contracts classified as works contracts, the valuation for Goods and Services Tax must follow the mandatory 70:30 split between supply of goods and supply of services.
The bench comprising Dr. Tanisha Dutta, Joint Commissioner and Jaydip Kumar Chakrabarti, Senior Joint Commissioner observed that once the supply is classified as a works contract, the entire EPC supply is treated as a supply of service, but the rate must be determined in accordance with the explanation appended to Entry 201A and Entry 38 of the relevant rate notifications.
Therefore, the Authority ruled that 70% of the gross contract value must be treated as supply of solar power generating system goods, taxable at 12% under GST, and 30% of the gross contract value must be treated as installation/commissioning services, taxable at 18% under GST. The Authority clarified that the taxable value for computing the 70:30 split is the entire gross consideration, not the value of materials or services as segregated by the contractor.
Construction of Units on 99-Year Leased Land Taxable as Construction Services: AAR Rules in the Absence of Title Deed
CITATION : 2025 TAXSCAN (AAR) 185
The bench of the West Bengal Authority for Advance Ruling (AAR) ruled that in the absence of transfer of title in land or execution of a conveyance deed, the transaction cannot be regarded as a sale of immovable property. Accordingly, the construction in such units on 99- year lease land was held to be taxable as construction services under the Goods and Services Tax.
The bench comprising of Dr. Tanisha Dutta, Joint Commissioner and Jaydip Kumar Chakrabarti, Senior Joint Commissioner ruled that the assignment of constructed units on leased land does not amount to a transfer of ownership and therefore does not constitute a sale of immovable property. The Authority considered the lease deed terms and noted that the applicant does not acquire ownership of land, and no transfer of title in land or building occurs in favour of prospective clients.
AAR Classifies Monthly Maintenance Charges Taxable Under SAC 9995 at 18% GST
CITATION : 2025 TAXSCAN (AAR) 185
The bench of the West Bengal Authority for Advance Ruling (AAR) examined whether monthly or annual maintenance charges collected from occupants of residential and commercial units are liable to Goods and Services Tax. The question before the Authority was whether such charges constitute a taxable supply of services, and if so, the applicable Service Accounting Code (SAC) and rate of GST. The ruling clarifies the tax treatment of maintenance-related recoveries in real estate and leasehold development arrangements.
The bench comprising Dr. Tanisha Dutta, Joint Commissioner and Jaydip Kumar Chakrabarti, Senior Joint Commissioner ruled that monthly or annual maintenance charges collected from unit holders constitute a taxable supply of services under the Goods and Services Tax law. The Authority ruled that the supply is classifiable under SAC 9995 - Services of Membership Organisations, and the applicable GST rate is 18%.
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