Tamil Nadu AAR Holds Query on Utilization of SGST Credit for IGST Liability Not Admissible for Advance Ruling Under Section 97(2) CGST Act

Background:
The applicant, a registered manufacturer of fireworks in Tamil Nadu, sought an advance ruling on whether, under Section 49(5), Section 49A, and Rule 88A of the CGST Rules, 2017, it could utilize SGST input tax credit (ITC) to discharge IGST liability while SGST output liability remained unpaid and CGST credit was still available. The applicant noted that such an offsetting order was permitted by the GST portal during GSTR-3B filing.

Applicant’s Submissions:
The applicant argued that, as per their understanding of the relevant statutory provisions, Section 49A mandates the use of IGST ITC first, while Rule 88A allows flexibility in using IGST credit against CGST or SGST. However, Section 49(5)(b) and (c) require CGST and SGST credits to be first utilized against their respective liabilities, and the proviso to Section 49(5)(d) restricts the use of SGST credit for IGST liability if CGST credit is still available. The applicant contended that portal acceptance alone does not validate a set-off order contrary to the law.

Proceedings and Hearing:
During the personal hearing, the applicant reiterated its submissions and sought clarification on the utilization of SGST ITC for IGST liability in the circumstances described. The Authority pointed out that the clarification sought pertained to the procedure for utilization of input credit for payment of tax liability, which does not fall within the categories specified in Section 97(2) of the CGST Act, 2017.

Court’s Reasoning:
The Authority examined Section 97(2) of the CGST Act, which enumerates the specific questions on which advance rulings may be sought, such as classification of goods/services, applicability of notifications, admissibility of ITC, and determination of tax liability. The Authority found that the applicant’s query did not relate to the determination of liability to pay tax or the applicability of any notification, but rather sought clarification on the procedural aspects of tax payment already assessed by the applicant. The Authority further noted that the applicant had not referenced any notification or raised a question that fit within the permissible categories under Section 97(2).

Decision:
The Authority concluded that the query was outside the ambit of advance ruling as defined by Section 97(2) and was therefore not liable for admission. Accordingly, the application was rejected under Section 98(2) of the CGST Act, 2017, with reasons specified in the order.

Conclusion:
This ruling clarifies that procedural queries regarding the order of utilization of input tax credits, even if permitted by the GST portal, are not admissible for advance ruling unless they fall within the specific categories enumerated in Section 97(2) of the CGST Act. The Authority emphasized the statutory limits of its jurisdiction in entertaining advance ruling applications.