Interpretation of term ‘proceedings’ for applying to Authority for Advance Rulings

M/s. Shalby Limited, (Shalby Hospital) [AAAR Gujarat]

Facts: The applicant sough Advance Ruling on certain issue with Gujarat AAR. After pronouncing the ruling, the GAAR received a letter from the Additional Commissioner of State Tax (Enforcement), stating that the appellant was issued GST DRC-01A by the state tax authorities regarding commencement of investigation against them on the issue raised by them in their application for advance ruling. AAR observed that appellant had withheld information and declared its previous ruling void ab-initio in terms of Section 104 of CGST Act, 2017.  Being aggrieved by the said Order, assessee filed instant appeal.

Held: Initiation of 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 intimation of liability - the use of words ‘any proceedings’ in proviso to Section 98(2) of CGST Act will encompass the investigation initiated against the appellant and also notice of intimation of tax liability - It is trite law that when one comes for justice one should come with clean hands. The appellant has indeed not revealed the fact of proceedings/investigation pending against them before the State Tax department on the same issue which was sought in application for advance ruling Accordingly, the invocation of Section 104 of CGST Act by the AAR and declaring its earlier advance ruling void ab initio is legal.