Legislature Enacted Under Section 97(2) CGST Act Carves Out the Authority’s Functional Jurisdiction

M/s. JK Paper Limited (JKPL) have two integrated Pulp, Paper and Packaging Board Plants. JKPL CPM has undertaken major expansion and modernization of its plant, for which it is eligible to avail the benefit of the State Incentive Scheme as per the Government of Gujarat Resolution. One of the conditions to avail of benefits under such an incentive scheme was that the JKPL CPM must obtain a new GST Registration number for the purposes of such Expansion of its plant. Hence, the existing unit of the JKPL CPM is registered under CGST Act and for the Expansion Project, JKPL CPM obtained another GST.

As the applicant desires to merge the two GSTINs of JKPL CPM, the main question before the authority was whether the applicant can transfer the closing balance of ITC from its GSTIN to the existing GSTIN of JKPL CPM by filing Form ITC-02 and whether any additional liability towards payment of Tax or reversal of ITC will arise on the Applicant on account of the merger.

The authority after reading section 95(a) and Section 97(2)(b) CGST Act held that the applicability of a notification issued under the provisions of this Act shall be a question on which advance ruling was sought on matters relating to the supply of goods or services or both. The duties and responsibilities conferred on this Authority by the Parliamentary Act should be exercised in accordance with the law. To pass Rulings on those matters pertaining to the GST scheme of law, beyond the jurisdiction carved in Section 97(2) CGST Act was held not to be proper and legal. There was no reason to substitute the phrase ‘CGST Rules’ for the word ‘Notification’ referred to in section 97(2)(b) and the authority found no merit in the submission and held that AAR has its carved out functional jurisdiction to pass Rulings as per Section 97(2). Legislature enacted section 97(2) CGST Act to carve the functional jurisdiction of the authority, it is not open for it to decide every question relating to GST. Therefore, the subject Application was non-maintainable and was rejected by GAAR.