Recipient of service entitled to seek advance ruling under GST, says Calcutta High Court

In a significant ruling, Calcutta High Court has said that ‘recipient of service’ is entitled to file Advance Ruling application under GST. Many Authority for Advance Rulings (AARs) have so far ruled that only the service provider can seek advance ruling.

Definition of ‘applicant’

“The appellants clearly fall within the definition of “applicant” as defined under Section 95(c) of the (GST) Act, therefore, we are of the view that the application filed by the appellants before the AAR has to be decided on merits,” a division bench of the High Court comprising Acting Chief Justice TS Sivagnanam and Justice Hiranmay Bhattacharyya said in an order pronounced on April 21.

The appellant Anmol Industries entered into a 30-year leasing agreement with the Shyama PrasadMookerjee Port, Kolkata (SMPK) for a piece of land which will be used for setting up commercial office complex. It has been agreed that the Anmol Industries will pay over ₹39 crore SMPK as upfront lease premium. It was also said that the allotment letter further seeks to charge GST at 18 per cent on the payment.

As the appellant was of the view that upfront lease premium is exempt from GST, it moved to West Bengal AAR to seek advance ruling on whether exemption would be available. During the course of hearing, the AAR observed that the application cannot be accepted since an application for advance ruling can be filed by the supplier in relation to supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. Here the applicant was the recipient of services.

Further, it said, if an application is filed by the recipient of goods or services or both on the taxability of his inward supply of goods or services and ruling is pronounced accordingly, such ruling shall be binding only on him and on the concerned officer or the jurisdictional officer of him. In no way, the ruling shall be binding on the supplier of such goods or services. “Any provisions of the Law, therefore, should not be interpreted in a way which defeats the very purpose of the objective and purpose of the law provision. We are therefore of the view that in the subject application, the applicant cannot seek an advance ruling in relation to the supply where he is a recipient of services,” AAR said following which Anmol Industries moved to the High Court.

After going through all the facts presented and submission made, the Division Bench observed that definition of the applicant in law is ‘any person registered or desirous of obtaining registration.’ Then a sub-section of the law deals with the question on which advance ruling can be sought for under the Act. Based on these two, the Bench held that appellants fulfil the eligibility to seek the advance ruling.

Accordingly, the Bench set aside the ruling by AAR and remanded back the matter to AAR to decide the application on merits and in accordance with the law.

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