Advance ruling passed by the authority of one particular state is not binding on the department of different state and third-party taxpayer

Last updated: 24 September 2024

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Quick Summary

The Calcutta High Court has ruled that an advance ruling issued by a tax authority in one state is not legally binding on the tax department or a third-party taxpayer in a different state. The court clarified that such rulings only apply to the applicant who sought the ruling and their jurisdictional officer. Therefore, an advance ruling from Goa, for instance, cannot be applied to a taxpayer registered in West Bengal.

Court :
Calcutta High Court

Brief :
The Hon'ble Calcutta High Court in the case of Sarkar Diesel v. Deputy Commissioner of State Tax [FMA No. 604 of 2024 dated June 25, 2024] advance ruling passed by the authority of one particular state is not binding on the department of different state and third-party taxpayer.

Citation :
FMA No. 604 of 2024 dated June 25, 2024

The Hon'ble Calcutta High Court in the case of Sarkar Diesel v. Deputy Commissioner of State Tax[FMA No. 604 of 2024 dated June 25, 2024] advance ruling passed by the authority of one particular state is not binding on the department of different state and third-party taxpayer.

Facts:

Sarkar Diesel ("the Appellant") during proceedings before the Hon'ble High Court relied upon the ruling passed by the AAR Goa relating to the subject matter for which the appeal has been filed.

Issue:

Whether advance ruling passed by the authority of one particular state is binding on the department of different state and third-party tax payer?

Held:

The Hon'ble Calcutta High Court in the case of FMA No. 604 of 2024 held that the Advance Ruling rendered in Goa would not be applicable to the Appellant who is registered taxpayer in the State of West Bengal. Also, the Advance Ruling may bind the Department at Goa but cannot bind a third-party tax payer, and bind only the applicant who went before the Advance Ruling Authority for a decision.

Our Comments:

As per Section 103(1) of the CGST Act, the advance ruling pronounced by the Authority or the Appellate Authority is binding only on the Applicant who had sought the advance ruling and on the concerned officer or jurisdictional officer relating to the Applicant.

OFFICIAL JUDGMENT COPY HAS BEEN ATTACHED

FAQ :

No, the Calcutta High Court has ruled that an advance ruling passed by the authority of one particular state is not binding on the department of a different state.

An advance ruling is binding only on the applicant who sought the ruling and the concerned or jurisdictional officer relating to that applicant.

No, the Calcutta High Court held that an advance ruling rendered in Goa would not be applicable to a taxpayer registered in West Bengal.

No, an advance ruling may bind the Department in the state where it was issued, but it cannot bind a third-party taxpayer or a department in a different state.

Section 103(1) of the CGST Act states that an advance ruling is binding only on the applicant who sought it and their concerned or jurisdictional officer.