The Madhya Pradesh High Court (Indore Bench) clarified that the advance ruling in the case of a similar trader cannot be applied universally by virtue of Section 103 of the GST Act to an entity having an independent GST number and an independent business entity. The Court therefore remanded the matter to the proper officer to examine the case independently without relying on the advance ruling.
The Division Bench comprising Justice Vivek Rusia and Justice Jai Kumar Pillai observed that the petitioner is a separate legal entity with an independent GST number and business, and therefore, an advance ruling in the case of Gulab Singh Chouhan cannot be applied universally to unrelated taxpayers.
The Bench concluded that the impugned final order merely states the petitioner’s reply was “not satisfactory” without any reasoning, rendering the order non-speaking and arbitrary, and hence, absent independent adjudication on the petitioner’s specific case, the authority failed to apply its mind.
Briefly, in this case, the petitioner, a proprietor of a paan shop with an independent GST registration and annual receipts below Rs. 20 lacs, challenged a show cause notice issued u/s 74 of the GST Act and also sought quashing of an advance ruling issued in the case of Gulab Singh Chouhan (Pan shops are operating under the name of the Karnawat brand, which carries the brand name trademark ‘Gulab Singh’), where it was held that composition scheme benefits were not available for traders dealing in paan masala and tobacco products, including those under a common brand.
The petitioner contended that he is a separate legal entity with distinct GST credentials and that the ruling in Gulab Singh Chouhan’s case, rendered u/s 98(4) by the Authority for Advance Ruling, was not binding on him under Section 103 of the GST Act. This was opposed by the Department, asserting that the petitioner and seven other related firms operate under the common brand name “Karnawat Paan”, and the ruling in Chouhan’s case applied to all of them.
Appearances:
Advocate Amit Dubey, for the Petitioner/ Taxpayer
Deputy AG Sudeep Bhargava, for the Respondent/ Revenue