West Bengal AAR Holds Advance Ruling Application Not Maintainable If Question Is Pending in Enforcement Proceedings Under GST Act

Background and Application:
The applicant, Sky Height Enclave Private Limited, engaged in the construction and operation of a hotel in Kolkata, sought an advance ruling from the West Bengal Authority for Advance Ruling (AAR) under Section 97(1) of the GST Act. The applicant raised questions regarding the admissibility of Input Tax Credit (ITC) on GST paid for works contract services and other inward supplies used in constructing the hotel building, including areas designated for restaurant and banquet facilities. The applicant contended that the entire construction was exclusively for providing taxable outward supplies and that the restriction under Section 17(5)(d) of the CGST Act should not apply.

Applicant’s Submissions:
The applicant argued that all inward supplies, including works contract services, were received wholly and exclusively for carrying out taxable outward supplies. It was submitted that the hotel building was not constructed for personal use or investment, but as an indispensable apparatus for providing taxable services. The applicant further asserted that since all outward supplies from the premises would be taxable, no apportionment of ITC under Section 17(1) was warranted.

Jurisdictional Authority’s Report and Enforcement Proceedings:
After the application was admitted, the jurisdictional SGST authority informed the AAR that an enforcement case had already been initiated against the applicant prior to the filing of the advance ruling application. The enforcement case, created on 5 January 2026, concerned the blocking of ITC under Section 17(5)(d) of the CGST Act, following an inspection that revealed the applicant was constructing a hotel building and had accumulated significant ITC without any outward supply.

Legal Reasoning and Decision:
The AAR noted that, under the proviso to Section 98(2) of the CGST Act, it is debarred from admitting an application for advance ruling if the question raised is already pending or decided in any proceedings under the Act. The authority found that the applicant’s questions regarding ITC were the same as those pending in the enforcement proceedings initiated by the jurisdictional authority. The applicant’s representative admitted knowledge of the enforcement proceedings and did not contest the facts.

The AAR observed that the application for advance ruling was filed after the initiation of the enforcement case, and that the applicant had made a misrepresentation by stating that the questions were not pending in any other proceedings. In light of these facts, the authority concluded that it was statutorily barred from giving a ruling on the questions raised.

Conclusion:
The West Bengal AAR rejected the application for advance ruling, holding that the pendency of the same questions in enforcement proceedings under the GST Act precluded the authority from admitting and deciding the application. The decision reinforces the statutory bar under Section 98(2) of the CGST Act against parallel proceedings on the same issue before the AAR.