AAAR RAJASTHAN RULED THAT PURE INTERPRETATION OF LAW IS BEYOND THE SCOPE OF ADVANCE RULING
RAJASTHAN APPELLATE AUTHORITY FOR ADVANCE RULING
GOODS AND SERVICES TAX
Before the AAAR comprising of:
l. Sh. Mahendra Ranga, Member (Central Tax)
2. Dr. Ravi Kumar Surpur, Member (State Tax)
Case Title :- M/s Federal-Mogul Ignition Products India Limited (GST AAAR RAJASTHAN)
Appeal No. RAJ/AAAR/APP/05/2022-23
Advance Ruling No. RAJ/AAR2022-23/14 dated 18.10.2022
Date of Judgement order – 15th March 2024
BRIEF FACTS
Para no. 1-. M/s Federal-Mogul Ignition Products India Limited, Bhiwadi having GSTIN — 08AAACF4128MIZJ (Here in after referred to as ‘the Appellant’) are engaged in the manufacture of auto components, supply and distribution of ‘Spark Plug’ used in two/three/four-wheeler automobiles. Further. they provide Canteen Services to their workers through contractual agreement with M/S Punjabi Flavourz Catering Service and recover subsidized deduction from workers.
Para no. 2-. The Appellant had sought Advance Ruling on the following questions: —
Whether the subsidized deduction made by the Appellant from the Employees who are availing food facility in the factory would be considered as a “supply” by the Appellant under the provisions of Section 7 Of Central Goods and Service Tax Act. 2017 and Rajasthan Goods and Service Tax Act, 2017.
(a) In case answer to above is yes,
1.Whether GST is applicable on the nominal amount deducted from the Salaries of their employees?
2.Whether GST would be applicable on the nominal amount deducted from the Manpower supply contractor in case of contractual employees?
(b)Whether Input Tax Credit (‘ITC’) of the GST charged by the Canteen Service Provider would be eligible for availment to the Appellant?
Para no. 3- The Appellant have contracted with M/S Punjabi Flavourz Catering Service (hereinafter referred to as ‘the Canteen Service Provider’) to operate Canteen within the Appellant’s factory premises; and a part of the Cost of the meals provided is deducted by the Appellant from their employees’ salaries on a monthly basis and at fix rate opting for availing food facility in Canteen. A part of the cost Of the meals provided to contractual workers is recovered from contractor in case Of contract workers. The Appellant are paying GST against supply Of canteen service on recovery basis since July 2017.
Para no. 4 –The AAR had to primarily decide whether the question on which Ruling is sought by the Appellant is an existing or ongoing transaction and falls within the meaning of the phrase “being undertaken” used in the definition of the tenn “Advance Ruling” or not, as the supply which already taken place since long back from July 2017 and continue till date.
GROUDS OF APPEALS
Para no. 6- The Appellant have filed an appeal On the following grounds:
6.1 That the definition meaning of the term ‘ongoing’ is ‘continuing’, ‘still in progress’. In the instant case, the transaction although is being undertaken since July, 2017, it is still being undertaken and will be undertaken in the future also.
6.2 The Appellant submitted that going by the meaning of the tenn ‘ongoing’ it can be said that the transaction being undenaken by the appellant falls within the purview of definition of ‘Advance Ruling’ prescribed under Section 95 of the CGST Act.
6.3 The Appellant further submitted that the Central Board Of Indirect Taxes and Customs (hereinafter referred to as ‘the CBIC’) in flyer on Advance Rulings has clarified that under GST. Advance Ruling can be obtained for a proposed transaction as well as transaction already undertaken by the Appellant. The rele,’ant extract of the tlier is reproduced below:
•Under the present dispensalion, advance ruling can be given only fora proposed transaction, whereas under GST, advance ruling can be obtained for a proposed transaction as well as transaction already undertaken hy the applicant’
6.4 The Appellant placed reliance on Advance Ruling pronounced by the Appellate Authority fo Advance Ruling. Rajasthan in the matter or m/s Shri Vinayak Buildcon [2022(5) TMI 450. Rajasthan].
6.5 Reliance in this regard is also placed on the Ruling pronouncedin the matter of M/s KEI Industries Limited [2019 (3) TMI 1073. Rajasthan]
6.6 The Appellant submitted that in the instant case that they wish to seek clarification On
(i) admissibility Of input tax credit of tax paid or deemed to have been paid and
(ii) determination of the liability to pay tax on goods or services or both; of Section 97 or the CGST Act. Thus. both the questions on which Advance Ruling is sought are questions on which an Advance Ruling can be filed. Thus. the Appellant has rightly filed the advance ruling.
RULING
Therefore, we hold that the Authority for Advance Ruling, Rajasthan has erred in not pronouncing the Ruling on Merits.
Para no. 19 –We observe that AAR Rajasthan have not taken note of the above contract furnished by the appellant for the period from 16.01.2022 to 16.01.2024,which was valid during the period when Ruling was pronounced.
Para no. 20 –We feel that it will be in the fitness of things if the Authority for Advance Ruling re-consider whole application dated 11.03.2022 filed by the appellant before the Authority for Advance Ruling, Rajasthan on merits.
ORDER
The Ruling of AAR. Rajasthan dated 18-10-2022 is set aside and the matter is remanded back to the AAR to decide the application afresh on merits after considering all the questions posed by the appellant in their application dated 11-03-2022
