No Ruling can be provided when Appellant has already undertaken supplies prior to date of filing of the application [AAAR]

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Studycafe | Mar 23, 2019 | Views 1705093

No Ruling can be provided when Appellant has already undertaken supplies prior to date of filing of the application [AAAR]

No Ruling can be provided when Appellant has already undertaken supplies prior to date of filing of the application [AAAR]

Order by Rajasthan Appellant Authority of Advance Ruling in matter of KEI Industries Limited : As the question posed by the Appellant is related to supplies undertaken by them prior to the date of filing of the application for advance ruling, no ruling can be given on the question.

No Ruling can be provided when Appellant has already undertaken supplies prior to date of filing of the application [AAAR]

The Extract of Order is given below for reference:

DISCUSSION AND FINDINGS

17. Having gone through the decision of the Authority for Advance Ruling (AAR) and submissions made by the Appellant in written form as well as those made during the course of personal hearing , we find that the Appellant wants the authority to decide whether the benefit of the Notification No. 03/2017-Central Tax (Rate) dated 28.06.2017 is available to them or not. We find from the record that the Appellant has asked for the benefit of this notification with respect to supply of goods mentioned by the DGH in the certificate dated 18.01.2018. We find that the supplies mentioned in the Certificate had been effected in the month of Jan 2018 , actual date of the transactions as per GSTR-1 is 22.01.2018 and 24.01.2018. We also find that the Appellant had applied for the Advance Ruling on 09.05.2018 whether benefit of the notification No. 03/2017-Central Tax (Rate) dated 28.06.2017 is available to these transactions i.e. the transactions effected in the month of Jan, 2018. Since the Appellant has asked for ruling on the transactions effected prior to the date of filing of the application before AAR , we find it appropriate to visit the definition of the ‘Advance Ruling’ given under Section 95(a) of the CGST Act which we are reproducing hereunder :-

95(a) “advance ruling” means a decision provided by the Authority or the Appellate Authority to an applicant on matters or on questions specified in sub section (2) of section 97 or sub-section (1) of section 100, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant;

18. From the definition, it is very much clear that the scope of the Advance ruling for both i.e. AAR (Authority for Advance Ruling) and AAAR (Appellate Authority for Advance Ruling) is limited to the transactions being undertaken or proposed to be undertaken . In the instant case, as already narrated, the application seeking advance ruling was filed on 09.05.2018 before the AAR with respect to supplies undertaken in the month of Jan, 2018 . Hence the case is out of the purview of the Advance Ruling.

19. Ld. Advocate has argued during hearing that it is not the opportune time to agitate the question that transaction on which Advance Ruling was sought had occurred earlier to the filing the application for Advance Ruling. We are not in agreement with the contention put forth by the Advocate. If the lower forum i.e. AAR has committed any error, this forum is not bound to carry the burden of that error. AAAR is an independent forum. Needless to mention that this body (AAAR) is at a higher pedestal than that of AAR and so it has all the powers to modify the ruling of the AAR the way it deems fit. If the AAR has entertained and pronounced its ruling on any issue which was outside the scope of the Advance Ruling , this forum (AAAR) has every power to undo the job done by the AAR while disposing appeal, and this job can be done by the AAAR even if neither of the Party (i.e Appellant or Department ) pleaded for the same during the proceedings of the appeal filed before it. This position is evident from Section 95(a) ibid which bounds this body (AAAR) also to entertain appeals only in relation to supply of goods or services or both being undertaken or proposed to be undertaken. This sole provision is enough to pronounce loudly that even decision on maintainability of the issue is not sacrosanct for this forum.

20. The appellant has also contended that, as per Purchase Order, warranty for the supplies undertaken is continued even today, hence, it can’t be said that the supplies were completed before they applied for Advance Ruling. They have submitted that the entire transaction is for supply of goods and supply of warranty services and will be completed only on expiry of warranty period. Supply of warranty is in continuation to the supply of goods, which is the principal supply. The contention of the appellant is not tenable . As per Section 95(a) ibid , the advance ruling can only be sought for supplies being undertaken or proposed to be undertaken . In the instant case, supply i.e. Sale of cables stood undertaken upon issue of invoice and movement of the goods on 22.01.2018 and 24.01.2018. Continued existence of the warranty on the date of filing of application i.e. 09.05.2018 does not put the transaction under the category of “supplies being undertaken”. Sale of goods (with sale of warranty its part and parcel) already stood undertaken on 22.01.2018 /24.01.2018 itself . If version of the appellant is accepted, supply of many goods like TV, Refrigerator , washing machine etc. would be treated as ‘ being undertaken’ even 5 to 10 years after their sale just because of their warranty clauses. In other words, a supplier of these goods can apply for advance ruling even 10 years after the sale of these goods just because warranty on the goods has not come to an end.

21. Appellant has submitted that they regularly enter into similar contracts for supply of identical I similar electric cables to various customers like Vedanta. In fact, there were purchase orders pending also on the date when the Appellant filed the advance ruling application, i.e. on 09.05.2018 hence the question asked in the advance ruling application should not be restricted to the POs enclosed by the Appellant with the Advance Ruling Application. We find that the appellant has asked for advance ruling with respect to particular transactions i.e. transactions mentioned in the DGH certificate dated 18.01.2018. Hence we are bound to pronounce our verdict on these transactions only.

22. The Appellant has submitted that courts have in a catena of decisions held that the question of maintainability shall not be raised at a belated stage, especially when the matter has been admitted and kept pending as raising a question of maintainability at a later stage serves no purpose . We are not in agreement with the contention of the Appellant . We have perused the various decisions cited by the Appellant . We find that these are not applicable to the facts and circumstances of the instant case. It is not the case where appeal has been entertained initially and later on its maintainability has been questioned . The question on maintainability has been raised by us at the first available opportunity i.e. during the hearing on 14.1 1.2018 . Going by natural just ice, we could not have decided this question on our own i.e. without hearing the Appellant . Hence appellant was heard and question was posed before them on 14.11.2018. Hence this case does not fit into the facts and circumstances of the cases cited by the Appellant.

23. The Appellant has again submitted that at this stage, when the application has been decided by the Advance Ruling Authority on merits after admitting the application specifically, the Appellant’s appeal shall not be rejected by the Hon’ble Appellate Authority on the ground of maintainability. We have already discussed this issue at length in the Para No. 19 hereinabove.

24. In view of foregoing , we rule as under :-

RULING

25. As the question posed by the Appellant is related to supplies undertaken by them prior to the date of filing of the application for advance ruling, no ruling can be given on the question.

Click here to Download the Advance Ruling

Click here to Download the Order of Appellant Authority of Advance Ruling

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