RECIPIENT OF SERVICE CAN SOUGHT ADVANCE RULING ON APPLICABILITY OF EXEMPTION NOTIFICTION

[Mr. M. GOVINDARAJAN]

Anmol Industries Limited entered into a leasing agreement with the Shyama Prasad Mookerjee Port, Kolkata (‘SMPK’ for short) wherein, the SMPK has agreed to lease an industrial plot of land at Taratala Road for a period of 30 years for setting up commercial office complex.  It has been agreed that the applicant shall pay a sum of Rs. 39,00,11,000/- to the Lessor, SMPK as upfront lease premium.  The applicant is of the view that as per entry No. 41 of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017, as amended from time to time, the above upfront lease premium is exempt from GST.

Therefore Anmol Industries Limited filed an application before the Authority for Advance Ruling, West Bengal seeking an advance ruling on the question in IN RE: M/S. ANMOL INDUSTRIES LIMITED [2023 (2) TMI 875 - AUTHORITY FOR ADVANCE RULING, WEST BENGAL]  - Whether the upfront premium payable by the applicant towards the services of leasing of the land for industrial purposes by SMPK is exempted under entry 41 of Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017?

During the course of hearing, the Authority for Advance Ruling  observed that the instant application cannot be accepted since an application for advance ruling can be filed by the supplier in relation to supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. But, in respect of supply involved in the aforesaid question, the applicant is the recipient of services.

Anmol Industries Limited submitted the following before the Authority for Advance Ruling-

• The definition of the word applicant as defined in section 95(c) of the Central Goods and Services Tax Act, 2017 (‘Act’ for short) provides that any person registered or desirous of obtaining registration under the Act.
• On the combined reading of the Sections 95 and 97 of the Act, what transpires is that an applicant can apply for advance ruling on the questions as stated above which includes the applicability of a notification issued under the provisions of the Act.
• The provisions nowhere state that the applicant has to be service provider in order to seek an advance ruling on the questions as stated in Section 97(2).
• The only condition to be fulfilled is that the applicant should be registered under the Act or desirous to undertake a registration.
•  There is no provision provided in the statute that the applicant must be an output supply of goods/services provider.
• Had that been the intent of the legislature, the legislature would not have used the term applicant in section 95(c) and would have rather used the word supplier which is already defined under section 2(105) of the Act.
• The word in relation to the supply of goods or services or both in Section 95(a) of the Act, can be interpreted to include, supply of both inward supply and outward supply.
• As per Section 97(2)(d) of the Act, the  applicant can ask question or administering of input tax credit of tax paid or deemed to have been paid. In respect of the above questions applicable to inward supply, where the receiver of goods or services or both alone can ask for his inward supply.
• The cogent reading of Sections 95(a) and 97(2) of the Act, doesn‘t deny the application of Authority for advance Ruling  by the person who is receiving the goods or services or both as applicant to obtain the advance ruling. Moreover, the recipient only is paying the tax and the supplier merely collecting the tax from recipient and paying to the Government.
• If the Authority for Advance Ruling  applies only for supplier not for the recipient, then such a view may be considered to be violating the principles of constitution.
• The section 103 of the Act nowhere specifies that the said ruling will be applicable to the supplier or the recipient and hence it is amply clear from the unambiguous words of the statue that any person who qualifies to be an applicant can seek an advance ruling on questions as per section 97(2) of the Act whether it be acting as a recipient of supply or supplier of the alleged supply of goods or services.

The submission of the applicant was duly considered by the Authority for Advance Ruling.  The Authority for Advance Ruling observed that a conjoint reading of section 2(6) and 2(47) of the Act  clearly denotes that it is the supplier of services who is required to account for his outward exempt supply in order to determine his aggregate turnover and further to claim exemption in respect of services specified in column (3) under serial number 41 of the Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017 [corresponding West Bengal State Notification No. 1136 F.T. dated 28.06.2017], as amended. The  intention of the legislature is to provide exemption to the taxable person who is supplying the services since other than the supply on which the recipient is liable to pay tax under reverse charge, tax is payable by the taxable person who is making the supply. Any provisions of the Law should not be interpreted in a way which defeats the very purpose of the objective and purpose of the law provision.  Therefore the Authority for Advance Ruling rejected the application filed by Anmol Industries Limited on the ground that the applicant cannot seek an advance ruling in relation to the supply where he is a recipient of services on 09.02.2023.

The petitioner filed a writ petition before Calcutta High Court, in ANMOL INDUSTRIES LTD. & ANR VERSUS THE WEST BENGAL AUTHORITY FOR ADVANCE RULING, GOODS AND SERVICES TAX & ANR. - 2023 (5) TMI 231 - CALCUTTA HIGH COURT, challenging the impugned order dated 09.02.2023, passed by the West Bengal Authority for Advance Ruling, Goods and Services Tax, on the ground that the petitioner's application before the advance ruling authority has been rejected inter alia, on the ground of its locus standi.   In view of the availability of alternative remedy, the High Court did not entertain the writ petition and to grant any relief to the petitioner except granting liberty to the petitioner to file the appeal against the aforesaid impugned order before the appellate authority in accordance with law, within 30 days from date and if such appeal is filed before the appellate authority, the same shall be considered on merit without raising the issue of limitation.

The writ petitioner filed intra-Court appeal in ANMOL INDUSTRIES LIMITED & ANR. VERSUS THE WEST BENGAL AUTHORITY FOR ADVANCE RULING, GOODS AND SERVICES TAX & ORS. - 2023 (5) TMI 288 - CALCUTTA HIGH COURT  The High Court observed that the term ‘applicant’ has been defined to mean any person registered or desirous of obtaining registration under the Act.  In the view of the High Court the said term has been defined in the most widely possible manner to include any person registered or desirous of obtaining a registration under the Act.  Since the petitioner was registered under the provisions of the Act.  The application filed by the petitioner would fall under clause (b) of Section 97(2) as the appellants seek for a ruling as regards the applicability of an exemption Notification No. 12/2017-CGST (Rate) dated 28.06.2017.  Therefore the present case will be well within the jurisdiction of the Authority for Advance Ruling to consider the application on merits rather than rejecting the same on the ground of lack of locus standii.  The High Court set aside the order of the Authority for Advance ruling rejecting the application for advance ruling filed by the petitioner.  The High Court remanded the matter to the Authority for Advance Ruling to decide the application on merits in accordance with law.