Applicant Withheld Information Regarding Commencement Of Investigation: AAAR Declares AAR's Ruling Void

The Gujarat Appellate Authority of Advance Ruling (AAAR) declared the AAR ruling void as the appellant had withheld information regarding the commencement of an investigation against them on the issue raised by them in the application for an advance ruling.The two-member bench of Vivek Ranjan and Milind Torawane has observed that the term "proceeding" is a very comprehensive term and, generally speaking, means a prescribed course of action for enforcing a legal right. It necessarily comprises the requisite steps by which judicial action is invoked. The process of investigation in tax administration is such a step towards the action of issuing a show cause notice, which culminates in a decision. An investigation is activated when there is evidence to show that there is tax evasion. The objective of the investigation is to carry out an in-depth analysis of the taxpayer's transactions, activities and records to ensure that tax due to the government exchequer is not lost in evasion. Therefore, the initiation of an investigation can be said to be the start of proceedings to safeguard government revenue. Further, the appellant was also issued Form GST DRC-01A Part A, which was an intimation of liability under the provisions of Section 74(5), to pay GST in terms of the proceedings initiated against the appellant.The AAAR noted that the use of the words "any proceedings" in the proviso to Section 98(2) of the CGST Act encompasses both the investigation initiated against the appellant and the notice of intimation of tax liability issued to them.The appellant sought an advance ruling on the issue of whether the medicines, consumables, and implants used in the course of providing core health services to in-patients for diagnosis and treatment or patients opting with or without packages along with allied services provided by the hospital, would be considered "composite supplies," and the issue of eligibility for exemption under the category "Health Care Services."The AAR held that the medicines, consumables, and implants used in the course of providing health care services to in-patients for diagnosis or treatment for patients opting with or without packages, along with allied services, i.e., room rent, food, doctor fees, etc., provided by the hospital, are "composites supplies." The supply of inpatient health care services by the applicant hospital is exempt from GST.Subsequently, the AAR received the letter from the Additional Commissioner of State Tax (Enforcement). The letter stated that the proceeding for access to business premises under Section 7l of the GGST Act was initiated on June 4, 2019 by the Gujarat State Tax and Commercial Department. The proceedings were converted into search proceedings under Section 67(2) of the Act on June 5, 2019. Search proceedings were continued until June 6, 2019.As a result, the GAAR invoked Section 104 of the CGST Act and held a personal hearing on June 15, 2021.The appellant submitted that, according to their bona fide belief, they have not obtained the ruling by fraud or suppression of facts and that the ruling was pronounced after following due procedure laid down in law. It cannot be declared void ab initio.The AAAR held that when one comes for justice, one should come with clean hands. The appellant has not revealed the fact that proceedings or an investigation are pending against them before the State Tax Department on the same issue that was raised in the application for an advance ruling.Appellant's Name: M/s. Shalby LimitedDate: 06/10/2022Click Here To Read Ruling

Applicant Withheld Information Regarding Commencement Of Investigation: AAAR Declares AAR's Ruling Void

Mariya Paliwala

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Mariya Paliwala

Applicant Withheld Information Regarding Commencement Of Investigation: AAAR Declares AAR's Ruling Void

Mariya Paliwala

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Mariya Paliwala

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