Export of Services Cannot Be Adjudicated in Advance Ruling: AAAR:

The Haryana Appellate Authority for Advance Ruling (AAAR) has held that the Authority for Advance Ruling (AAR) does not possess jurisdiction to determine whether a transaction qualifies as “export of services” or to adjudicate eligibility for Input Tax Credit (ITC) refunds under the GST law. A Bench comprising Sh. Naveen Kumar Jain, IRS (Member-CGST) and Sh. Vinay Pratap Singh, IAS (Member-SGST), dismissed the appeal filed by M/s Maithani Enterprises, Gurugram.

The appellant had approached the AAR seeking a binding ruling on whether its business support and marketing facilitator services rendered to foreign clients would qualify as “export of services” under Section 2(6) of the IGST Act, 2017. The appellant further sought clarification that such supplies would be treated as zero-rated and consequently entitle it to a refund of accumulated Input Tax Credit under Section 16 of the IGST Act.

Also Read

GST Department Issues Rs.116.72 Crore Notice to LG Electronics India

However, the Haryana AAR declined to entertain the application, holding that the questions raised were beyond its statutory jurisdiction under Section 97(2) of the CGST/HGST Act, 2017. Aggrieved, the appellant carried the matter in appeal before the AAAR.

“The core determination required in the present case, i.e., whether the services qualify as export of services, is intrinsically linked to the determination of place of supply, which does not fall within the scope of Section 97(2) of the CGST Act.”

Before the AAAR, the appellant contended that the issue squarely fell within the ambit of “determination of liability to pay tax” and therefore ought to be examined on merits. It was further argued that denial of jurisdiction defeats the purpose of advance ruling mechanism under the GST regime.

The Authority, however, observed that the scope of advance ruling is specifically restricted under Section 97(2), which does not include questions relating to “place of supply” or consequential determination of export status. The Bench noted that deciding whether a transaction amounts to export of services necessarily requires examination of place of supply provisions, which is expressly excluded from the advance ruling framework.

The AAAR further held that the issue relating to grant or sanction of refund of accumulated Input Tax Credit lies exclusively within the domain of the jurisdictional proper officer, and cannot be pre-emptively decided by the advance ruling mechanism.

“The statutory scheme under the GST law clearly vests the authority to examine and sanction ITC refunds with the jurisdictional officer, and such powers cannot be usurped by the Advance Ruling Authority.”

Thus, the AAAR upheld the order of the AAR and dismissed the appeal, holding that both export determination and ITC refund eligibility fall outside the jurisdictional scope of advance ruling authorities under Section 97(2) of the CGST Act.

To Read Full Order, Download PDF Given Below.