Advance Ruling Pending Cases and Section 98(2) of the CGST Act
What Does Section 98(2) Say?
The proviso to Section 98(2) of the Central Goods and Services Tax (CGST) Act, 2017, clearly states that an advance ruling application cannot be admitted if the question is “already pending or decided” in any proceedings related to the applicant. But what does “already pending” really mean? The recent judgment in General Motors India Private Limited v. State of Maharashtra clarifies this.
The Case: General Motors India v. State of Maharashtra
- Case No.: Writ Petition No. 17122 of 2024
- Date of Judgment: December 11, 2024
- Court: Hon’ble Bombay High Court
Key Facts:
- The petitioner, General Motors India, received a pre-show cause notice (SCN) on October 22, 2024, under Section 73(5) of the CGST Act.
- On December 20, 2023, the petitioner had applied for an advance ruling regarding the taxability of land and building sales under an Asset Purchase Agreement (APA).
- The Authority for Advance Ruling (AAR) refused to dispose of the application due to the pending pre-SCN.
The Issue:
Does the term “already pending or decided” mean that a case is pending at the time of filing the advance ruling application?
Court’s Decision:
The Bombay High Court ruled:
- Pending at Filing Date: The expression “already pending” refers to a case pending on the date of filing the advance ruling application.
- No Bar on Advance Ruling: If proceedings began after the application, the authority cannot reject the application under Section 98(2).
- Clear Obligation: The respondent must decide the advance ruling application within 90 days per Section 98(6) of the CGST Act.
Key Observations:
- No Bypass of Remedies: The court discouraged bypassing alternate remedies and emphasized not rushing to court prematurely.
- Binding Ruling: If the advance ruling favours the petitioner, it binds both the petitioner and the respondent under Section 103(1) of the CGST Act.
Why This Case Matters:
This judgment provides clarity on interpreting Section 98(2) and prevents unjust rejection of advance ruling applications due to subsequent proceedings. It ensures timely decisions and upholds taxpayer rights.