BEFORE THE APPELLATE AUTHORITY FOR ADVANCE RULINGS FOR

THE STATE OF UTTARAKHAND GOODS & SERVICE TAX, E-BLOCK,

NEHRU COLONY, DEHRADUN-248001

PRESENT:

Shri P.K. Goel (CGST Member)

Dr. Ahmed Iqbal (SGST Member)

(Proceedings under Section 101 of the Central Goods and Service Tax Act, 2017 and Uttarakhand Goods and Service Tax Act, 2017 in the matter of M/S Vardhan Holidays Ramnagar)

The instant proceedings have arisen out of an appeal filed by M/s Vardhman Holidays. Village- Shivlalpur Pandey. Kashipur Road, Ramnagar (hereinafter referred to as 'the appellant') under Section 100 of the CGST Act 2017 against the Advance Ruling No.03 2020-21 dated 08.07.2020 passed by the Authority on Advance Ruling, Uttarakhand.

At the outset, we would like to make it clear that the provisions of both the CGST Act and the SGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the SGST Act.

The facts in brief, are as follows-

1. M s Vardhman Holidays. Village- Shivlalpur Pandey. Kashipur Road, Ramnagar had, vide application dated 07.02.2020 filed under sub-section (1) of Section 97 of the CGST/SGST Act, 2017. sought an Advance Ruling on admissibility of input tax credit in following issues situations,-

(a) Whether input credit on services received for construction of Hotel building is available;

(b) Whether input credit on work contract service received for construction of Hotel building is available;

(c) Whether input credit on goods services received for construction of banquet hall, which is rented further for customers is available;

(d) Whether input credit on work contract service received for construction of banquet hall, which is rented further for customers is available;

(e) Whether the expression "plant & machinery' would include 'hotel/banquet' under Section 17 and accordingly, input credit on work contract service or any goods service received for construction of such hotel/banquet hall is available;

(f) Whether specified goods viz Lifts, sanitary items, underground cables etc. fall under expression "plant & machinery'. & whether input credit on same and GTA paid on such under RCM architect services etc. are available.

The aforesaid application was admitted in terms of Section 97(2)(d) of CGST/SGST Act, 2017.

2. The applicant is engaged in the business of supply of accommodation, restaurant and renting of immovable property (banquet hall) services to its customers. The Applicant primarily engaged in hospitality sector provides various services to its customers classifying the same as supply of service. more specifically tabulated as under:-

3. Hearing in the matter was fixed on 25.02.2020, wherein DC, SGST, Uttarakhand submitted that a writ petition (WP No. 1898 2019) is pending before Hon'ble High Court of Uttarakhand on a similar issue in the ease of M/s Rosewood Hospitality (P) Ltd.. Thus, the Authority look the view that before deciding the application, the fact of the aforesaid writ petition, whether admitted or otherwise needs to be considered. Accordingly, a SCN dated 17.03.2020 was issued to the applicant requiring them to show cause to the Authority for Advance Ruling as to why the said application filed by them should not be rejected as per pro\ iso to Section 98(2) of the Act.

4. Personal hearing in the matter was held on 15.06.2020 via video conferencing, wherein the applicant's counsel reiterated his earlier submissions filed vide letter dated 26.05.2020 and further submitted that appeal in the matter of CCE Vs Safari Retreats (P) ltd. & others has been admitted by the Hon'ble Supreme Court against the judgment of Hon'ble Odisha High Court and as no stay has been granted, the decision of Hon'ble Odisha court is binding as on date. However, DC, SGST', Uttarakhand contended that since the appeal is pending before Hon'ble Supreme Court, the Input Tax Credit (ITC) in question should not be allowed under Section 17(5) of the Act.

5. While deliberating the matter, members of the Authority for Advance Ruling observed that on the issue of admissibility of ITC in respect of goods/ services received while constructing Hotel including restaurant & banquet hall, on which applicant has sought advance ruling, is pending decision in Writ Petition (WP No. 1898/2019) before the Hon'ble High Court of Uttarakhand in case of M/s Rosewood Hospitality (P) Ltd. Further, the Authority for Advance Ruling also observed that though the admissibility of ITC on goods services received for construction of immovable property was decided by the Hon'ble High Court of Odisha in case of M/s Safari Retreats (P) Ltd, revenue's appeal in the matter is pending in SI P (C) (Diary No. 37367/2019) before Hon'ble Supreme Court.

6. Accordingly. AAR rejected the application filed by applicant in terms of the provisions of Section 98(2) of the Act on the grounds that issues raised by them were sub-judice.

7. Aggrieved with the aforesaid Order of the Authority for Advance for the state of Uttarakhand.. M s Vardhman Holidays filed the appeal.

The key grounds of appeal are as follows-

a. The impugned ruling dated 08.07.2020 of the Authority for Advance Ruling of the State of Uttarakhand is a non-speaking order and violates the principles of natural justice. The Authority for Advance Ruling has passed impugned ruling without any discussion regarding applicability of submission made by the appellant and without appreciation of facts and law including the judicial precedents quoted/relied upon by the appellant.

b. Appellant contended that the only ground on which the application can be rejected is when proceedings are pending or decided, as the case may be, in case of the Applicant, which means Appellant and no other person. That, in the impugned order, the Authority for Advance Ruling gravely erred in interpreting the expression 'an applicant'.

c. That entire concept of Advance Ruling is Taxpayer/ assessee specific and the expression 'an applicant' anywhere in the relevant provisions carries the meaning ' the person/ entity, who has sought the Advance Ruling' which in the instant case is Appellant and not any other person, this interpretation further finds force in the fact that the binding nature of ruling passed by the Authority for Advance Ruling is restricted to the applicant who sought the ruling and no other person can be forced to follow the said ruling who is not an applicant, unlike judgments or rulings passed by Hon'ble Tribunals or High Courts, which arc applicable throughout the State as binding precedents.

d. That, rejection of Application on the basis of a sub-judice matter (pending in the case of M/s Rosewood) and considering the same as judicial discipline, is totally misplaced.

e. The issues raised by them before the AAR have already been decided by Hon'ble High Court, Odisha in the case of M/s Safari Retreats (P) I.td and since no stay against the said order has been granted so the said order is binding on lower formations.

Accordingly, the appellant has prayed to set-aside the impugned Ruling passed by the Authority of Advance Ruling on account of reasons and submissions made in the Appeal and decide the Application on merits.

Personal Hearing

The case was posted for personal hearing on 27.10.2020 through video conference. Sri Aishwarya Sharma. Advocate, appeared on behalf of the appellant and Smt. Preeti Manral. DC. SGST represented the SCST department. Sri Sharma strongly reiterated his contentions made out in the appeal memorandum, He further contested that the referred writ application of M s Rosewood Hospitality (P) Ltd. was not presented before the AAR and therefore rejection of their application was arbitrary.

Discussion & Findings

We have gone through the appeal memorandum, records of personal hearing, Ruling of AAR and all other relevant records and citations.

At the very outset, we are unable to accept the appellant's contentions about the interpretation of the term "an applicant" used in Section 98(2) of CGST Act 2017. English has two articles, the and a an. The is used to refer to specific or particular nouns; a/an is used to modify non-specific or non-particular nouns. The is called definite article and a/an is called the indefinite article. The use of the article 'an' before the noun applicant is meant to denote non-specific. In other words, the term "an applicant' has to mean any applicant and not a particular applicant. Thus. The interpretation of 'an applicant' made by the AAR in their Ruling cannot be faulted. However, having said that, we find that the impugned Ruling is non-speaking and appears to be based on hearsay since Learned AAR have not discussed anywhere about having gone through the referred writ application of M/s Rosewood Hospitality (P) Ltd. and the basis of their inference that the issues raised by the appellant are covered by the said writ. In fact, in spile of being pointed out by the appellant about the show cause notice mentioning only two issues in common with the writ, it appears that the applicant was summarily rejected without in depth scrutiny.

We, therefore, are of the view that the Learned AAR are required to examine referred cases and all the six issues individually on merits and pass a detailed speaking order if they are not sub judice.

Ruling

The Ruling no. 03/2020-21 dated 08.07.2020 is set aside and the matter is remanded for fresh consideration.