TMI Blog2020 (1) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... ependent catering to different situations. It is also stated by the appellant that with the intention to avoid blocking of capital / funds, the legislature has provided a situation, where when the distinct person is eligible to take full input tax credit and is going to make further supply, then, in respect of initial supply, it is not necessary to adopt only open market value and pay higher tax and block such tax amounts. There is no specific regulation in the said Rules, that the rules are to be applied seriatim. Further looking at the construction of the said rule, it is evident that when an Open Market Value is available, sub-rule (b) and (c) may not be applicable but the same is not the case in respect of the provisos. Proviso 1 entitles the appellant to value at 90% of the ultimate sale value to the unrelated customer at the initial supply at his option in cases of as such supply - Considering the constructions of the rule as above, we find that the law provides the taxpayer an option to adopt 90% of the price charged as value to be adopted initially (i.e., supply between distinct persons) and in the alternative, in case of full Input tax being available to the recipie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the said advance ruling have changed. 4. Under Section 104(1) of the Act, where the Appellate Authority finds that advance ruling pronounced by it under sub-section (l) of Section 101 has been obtained by the appellant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void sb-initio and thereupon all the provisions of this Act or the rules made thereunder shall apply to the appellant as if such advance ruling has never been made. At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act. The subject appeal has been filed under Section 100(1) of the Tamilnadu Goods Services Tax Act 2017 / Central Goods Services Tax Act 2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and (b) to Chapter IV of CGST/TNGST Rules 2017 read with Section 15 of the CGST/TNGST Act 2017. 4. Aggrieved by the above decision, the Appellant has filed the present appeal. The grounds of appeal are as follows: In paragraph 4.3 of the order, the Authority has observed that once Rule 28(a) is applicable, Rule 28(b) or (c) cannot be used by the appellant for determining the value of the supply of goods between distinct persons. The appellant do not have any dispute with this stand and it is not their case that valuation as per Rule 28(b) or (c) is to be considered. The appellant are concerned only with the application of provisos contained in Rule 28 to the facts and circumstances of their case. In paragraph 4.4 of the order, the Authority has observed that recipients (branches) in other states further supply such goods to their customers without any further value addition, i.e. they are supplied as such. The appellant submit that they have not made any specific averment to that effect in their application. While sun glasses are further supplied as such, spectacle frames are fixed with lenses depending, upon customers requirements and then, suppli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the lower authority are misplaced. It is only with the intention to avoid blocking of capital / funds, the legislature has provided a situation, where when the distinct person is eligible to take full input tax credit and is going to make further supply, then, in respect of initial supply, it is not necessary to adopt only open market value and pay higher tax and block such tax amounts. In such a situation, till the credit is used by branch offices, the credit amount will remain accumulated. On the other hand, when full credit is taken at a lower value and further supply is made at a higher value at the point of supply, the branch offices will utilize the credit and also pay additional tax based on the open market: value at the time of making further supply. The appellant will be entitled to adopt any value range for supply of these items to their branches when their branches are entitled to take full credit of the tax paid and such values, therefore, adopted by the appellant are to be treated as open market value for the purposes of CGST Act and Rules. PERSONAL HEARING: 5. The Appellant was granted personal hearing as required unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le for full input tax credit, such a value shall be deemed to be the open market value. 6.2 The appellant aggrieved by the interpretation of the Lower Authority and the ruling that the value to be adopted shall be the open market value of such supplies that is available as per Rule 28(a) and Explanation (a) to Chapter IV of CGST/TNGST Rules 2017 read with Section 15 of the CGST/TNGST Act 2017, has filed the present appeal. The main ground of appeal is that Rule 28 contains two provisos and each proviso is for taking care of a particular situation and there is no requirement that these provisos should be applied sequentially. 6.3 It is to be understood that the executive cannot impose tax. It is a statutory function. The proper test in interpreting a Section or a Rule in a taxing statute is to understand as to what its language, according to its natural meaning, fairly and squarely states. There is no room for any intendment or presumption. Accordingly, we intend to look fairly at the language used. 7. Before proceeding further, Rule 28 of the CGST/TNGST Rules 2017 and the Explanation to Chapter IV of the rules are examined as under: 28. Value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue is the value adopted for similar supply at the same time in respect of supplies to unrelated buyer. Sub-rule (b) and (c) are applicable in cases where such Open Market Value is not available. Examining the provisos to the Rule, it is clear that Proviso 1 provides for adopting 90% of the price charged for the supply of goods of like kind and quality by the recipient to his customer not being a related person, in cases of as such supply and the second proviso states that when the recipient is eligible for full input tax credit, the value declared in the invoice is to be treated as Open Market Value. 7.2 In the case at hand, it is accepted by the appellant and the Lower Authority, that the sub-rule (b) and (c) cannot be used for the reason that Open market value is available. The claim of the appellant is that when the recipient is eligible for the credit, as per the second proviso to the Rule 28, the invoice value shall be the Open Market Value and they need not apply the Open Market Value as per the Explanation or to adopt an amount equivalent to ninety percent of the price charged by the recipient to the unrelated buyer as ruled by the Lower Authority. The ap ..... 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