Gujarat AAAR Upholds Cancellation of I-Tech Plast’s Advance Ruling for Suppressing DGGI Inquiry
Pranav B Prem
The Gujarat Appellate Authority for Advance Ruling (GAAAR) has dismissed the appeal filed by I-Tech Plast India Pvt. Ltd. and upheld the order of the Gujarat Authority for Advance Ruling (GAAR) declaring its January 2021 ruling void ab initio for suppression of material facts relating to an inquiry by the Directorate General of GST Intelligence (DGGI), Pune.
Background of the Case
The appellant, engaged in manufacturing plastic toys, had approached GAAR in November 2020 seeking clarity on:
The correct GST classification and rate applicable on its plastic toys, and
Eligibility to claim Input Tax Credit (ITC) on debit notes issued in FY 2020–21 for transactions of FY 2018–19.
On 20 January 2021, GAAR classified the toys under HSN 95030030 (12% GST) and denied the ITC claim.
Suppression of DGGI Inquiry
Subsequently, it came to light that DGGI Pune had already initiated correspondence with the company in September 2020 regarding alleged misclassification of goods. Following this, the appellant:
Paid ₹2.19 crore IGST and ₹40.87 lakh interest for FY 2019–20,
Paid another ₹94.61 lakh for the period April–September 2020, and
Revised its GST rate to 18% w.e.f. October 2020.
These crucial facts were not disclosed in its GAAR application. On this basis, GAAR invoked Section 104 of the CGST Act, 2017, which empowers it to declare a ruling void if obtained by fraud, suppression, or misrepresentation.
Appeal and Arguments
In its appeal before GAAAR, I-Tech Plast argued that:
No “proceedings” were pending at the time of its application—only an “inquiry,” which need not be disclosed.
Payment of the differential tax did not imply that proceedings were pending.
The term “proceedings” under GST law refers to show-cause notices (SCNs) or orders, not preliminary investigations.
DGGI Pune lacked jurisdiction as it was not the jurisdictional authority.
The appellant also cited several judgments, including Liberty Oil Mills, Radha Krishan Industries, and GK Trading Company, to argue that “investigations” cannot be equated with “proceedings.”
GAAAR’s Findings
Rejecting the appeal, GAAAR held that:
The company’s payment of ₹2.19 crore and adoption of 18% GST before filing the ruling application showed that it was acting in line with DGGI’s findings, making the inquiry directly relevant.
Section 98(2) requires disclosure of any pending or decided matter “in respect of the same question.” The non-disclosure here was material since the inquiry was on the exact issue—classification of toys.
The appellant’s argument distinguishing “inquiry” and “proceedings” was untenable, as the facts clearly showed proceedings under Section 73 of the CGST Act were underway.
The jurisdictional objection against DGGI Pune was invalid, since a notification grants DGGI officers pan-India authority.
Reliance on other case laws was misplaced, as none dealt with suppression under Section 104.
The Authority observed: “All these facts, though directly related to the issue raised before the Advance Ruling Authority, were never disclosed in the application. The applicant manifestly failed to do so. Hence, we are of the considered opinion that they have failed to cross the bar of Section 104.” With this ruling, GAAAR confirmed that the advance ruling dated 20.01.2021 stood void ab initio, meaning it is deemed never to have existed. The appeal was dismissed, and the company’s attempt to rely on the earlier classification failed.
Appellant’s Name: I-Tech Plast India Pvt. Ltd.
