The applicant had raised an issue before the Authority for Advance Rulings (AAR) as to whether the supply made would be eligible as export of service as defined in Section 2(6) of the IGST Act, 2017. The Authority for Advance Rulings (AAR) held that question essentially includes the determination of ‘place of supply’ which is not included in Section 97(2) of the CGST Act, 2017 as a question on which advance ruling can be sought.

That Authority for Advance Rulings (AAR) is a creature of statute and has to function within the lawful boundary mandated by the Act; that as the ‘place of supply’ is not covered by Section 97(2) of the Acts, the Authority for Advance Rulings (AAR) is helpless to answer the question raised in the application, as it is lacking jurisdiction to decide the issues – Accordingly, the Application was rejected by the Authority for Advance Rulings (AAR).

Issues

In the present matter, the issue was whether the Authority for Advance Ruling (AAR) has jurisdiction to determine Place of Supply under GST.

Judgment

The Hon’ble Court held as under It is true that the issue relating to the determination of place of supply is not expressly mentioned in any of the clauses as per clauses (a) to (g) of section 97(2) of the CGST Act, but there cannot be any two arguments that the said issue in regard to the determination of place of supply, which is one of the critical issues to be determined as to whether or not it fulfills the definition of place of service, would also come within the ambit of the larger issue of ‘determination of liability to pay tax on any goods or services or both’ as envisaged in clause (e) of section 97(2) of the Act. The Authority for Advance Rulings (AAR) has proceeded on a tangent and has missed the said critical aspect of the matter and has taken a very hyper-technical view that it does not have jurisdiction for the simple reason that the said issue is not expressly enumerated in section 97(2).

The Court has no hesitation to hold that the said view taken by the Authority for Advance Rulings (AAR) is lawfully wrong and faulty and, therefore, the matter requires interdiction in judicial review in the present writ proceedings. It is ordered that the said rejection order of the Authority for Advance Rulings (AAR) is quashed and the application will stand remitted to the Authority concerned for fresh consideration and decision according to the law. The Advance ruling in terms of section 98(4) may be duly rendered by the AAR without much delay, preferably within a period of 3 to 4 months. It has to be borne in mind that India is at the cusp of great global changes and there cannot be any two views for anyone, who cherishes the best interest for this country, that with extreme hard work and industry, we have to progress economically, socially and in all spheres of life

A foreign entity like the principal company, in this case, would like to have certainty and precision about tax liability so that they can accordingly modulate their future outlook and it goes without saying that the executive authorities concerned including the taxation authorities will have to take the correct perspective and according to the legislative policy framed in accordance with the wisdom of the State legislatures and the Parliament to make sure that there are precision and certainty in taxation liability, etc. so that the domestic investors and foreign investors, will get more incentive to continue and increase their level of activities for the overall better growth and development of our economy.