Introduction

The case of Apar Industries Limited, In Re, adjudicated by the Authority for Advance Rulings, GST on March 18, 2020, delves into the intricate aspects of jurisdictional authority under the Goods and Services Tax (GST) framework in India. Apar Industries Limited, a manufacturer of Marine and Pressure Tight Cables, sought an advance ruling to ascertain the applicability of GST at a concessional rate of 5% on goods designated as parts of warships. This commentary explores the background, key issues, parties involved, and the judicial reasoning that led to the final decision.

Summary of the Judgment

Apar Industries Limited filed an application under Section 97 of the Central Goods and Services Tax Act, 2017 (CGST Act) and the Maharashtra Goods and Services Tax Act, 2017 (MGST Act), seeking an advance ruling on the GST liability of supplying specific cables intended for use in warships. The company argued that these goods should attract GST at a concessional rate of 5% under Schedule-1, Sr. No. 252 of Notification No. 1/2017-Integrated Tax (Rate). The Maharashtra Authority for Advance Rulings (AAR) scrutinized the application and ultimately rejected it on the grounds of lack of jurisdiction. The AAR held that since the supply of goods was undertaken from Gujarat, the jurisdiction lay with the Gujarat State AAR, not Maharashtra. Therefore, the application filed in Maharashtra was deemed non-maintainable and rejected without delving into the merits of the GST rate applicability.

Analysis

Precedents Cited

The applicant referenced the Advance Ruling Order No. CT/5496/18-C3/ from Kerala in the case of Saraswathi Metal Industries, Alappuzha, asserting that similar circumstances warranted a concessional GST rate. However, the Maharashtra AAR differentiated based on the jurisdictional specifics, emphasizing that rulings are state-specific and dependent on the location of the supply.

Additionally, the applicant cited Supreme Court judgments such as Anvar P.V. v. P.K. Basheer and Pankajakshi v. Chandrika to reinforce the argument against jurisdictional constraints. Nevertheless, the AAR maintained that the GST framework's jurisdictional provisions supersede general civil procedural laws, aligning with the legal maxim Generalia Specialibus Non Derogant.

Legal Reasoning

The core of the AAR's reasoning rested on the GST Act's provisions regarding jurisdiction for advance rulings. Specifically, Section 9.6 of the CGST Act delineates that an Advance Ruling Authority is confined to its respective state. Since Apar Industries Limited's supply originated from Gujarat—a state distinct from Maharashtra—the Maharashtra AAR lacked the authority to issue a ruling. Furthermore, Section 95 of the CGST Act mandates that the Advance Ruling Authority can only entertain applications related to supplies undertaken or proposed within its jurisdictional state. The AAR emphasized that the supply from Gujarat, managed by a separate GST-registered entity, falls under Gujarat's purview. Therefore, any application regarding such a supply must be directed to the Gujarat State AAR. The applicant's argument that GST is destination-based and, hence, should be indifferent to the supply's origin was countered by the AAR's interpretation that jurisdiction for advance rulings is inherently tied to the state where the supply originates, irrespective of the destination state's consumption principles.

Impact

This judgment underscores the strict adherence to state-specific jurisdictions in the GST framework, especially concerning advance rulings. Companies operating across multiple states must ensure that their applications for advance rulings are submitted to the correct state authority based on the supply's origin. This decision reinforces the importance of understanding the nexus between the supply location and the jurisdiction of the Advance Ruling Authorities, thereby ensuring compliance and avoiding unnecessary legal rejections.

Complex Concepts Simplified

Advance Ruling under GST

An Advance Ruling is a mechanism under the GST Act that allows taxpayers to seek clarity on the tax implications of specific transactions before they undertake them. This ensures certainty and helps in planning tax liabilities effectively.

Jurisdiction of Advance Ruling Authorities (AAR)

Each state in India has its own AAR, established under its respective State GST Act. The jurisdiction of an AAR is limited to the state it is constituted for, based on where the supply originates. Therefore, an AAR in Maharashtra cannot rule on a supply that is undertaken from Gujarat.

Concessional GST Rates

The GST framework provides concessional rates for specific goods and services under various schedules. In this case, the applicant sought a lower GST rate of 5% for goods classified under Chapter 8544 when used as parts of warships, as per Schedule-1, Sr. No. 252 of Notification No. 1/2017-Integrated Tax (Rate).

Conclusion

The Apar Industries Limited case serves as a pivotal reference for understanding the jurisdictional boundaries of Advance Ruling Authorities under the GST regime. It highlights the necessity for companies to align their advance ruling applications with the correct state authorities based on the supply's origin. By reaffirming that each state's AAR operates within its own jurisdiction, the judgment ensures that the GST framework maintains its structured and state-specific administration, thereby fostering legal clarity and compliance among taxpayers.