In a significant ruling reported as [2026] 183 taxmann.com 703 (AAR-Tamil Nadu), the Authority for Advance Ruling, Tamil Nadu declined to admit an application for advance ruling on the ground that the very same issue relating to GST liability had already been examined in prior scrutiny and assessment proceedings by the jurisdictional tax authorities.
The applicant had approached the AAR seeking clarity on the taxability/classification of its supplies under the GST law. However, it was found that departmental proceedings—including scrutiny of returns, issuance of notices, and adjudication—had already been initiated and concluded on the identical question before the filing of the advance ruling application.
Invoking the statutory bar under Section 98(2) of the CGST/TNGST Acts, the Authority held that an advance ruling cannot be entertained where the question raised is already pending or decided in any proceedings in the applicant’s case. Consequently, the application was rejected at the admission stage.
This ruling reiterates the principle that the advance ruling mechanism is intended for prospective clarity and cannot be used as an alternative forum once adjudication proceedings have commenced.
Case Title
In re M/s. Murali Pharmacy (Prop: …), Authority for Advance Ruling, Tamil Nadu (AAR).
Reported in 2026 as [2026] 183 taxmann.com 703.
Background & Facts
- The applicant (a GST-registered contractor providing services) filed an application before the AAR seeking clarification on classification and taxability/exemption of its services under the GST law.
- Prior to filing the advance ruling application, the Department had initiated scrutiny and assessment proceedings against the applicant for differences between returns filed (e.g., GSTR-3B vs. GSTR-9) and had issued a DRC-01A intimation and subsequent show cause notices on the same issue of GST liability.
- These proceedings included assessment orders confirming tax/interest after the applicant failed to address departmental queries in time and after follow-up as directed by Madras High Court orders.
Legal Issue Before AAR
Whether the questions on classification and exemption of the services raised by the applicant could be entertained for an advance ruling when the same question was already under active scrutiny and assessment by the jurisdictional GST authorities.
AAR’s Decision
Rejection of the Advance Ruling Application
The AAR rejected the application for advance ruling on the following grounds:
- Statutory Bar Under Section 98(2) of the CGST/TNGST Acts:
The AAR relied on the first proviso to Section 98(2) — which states that the Authority shall not admit an advance ruling application where the question raised is already pending or decided in any proceedings in the case of the applicant. - Issue Already Under Adjudication:
The core legal issue sought to be clarified before the AAR — the taxability or exemption classification — was already the subject of departmental scrutiny, show cause notice, and assessment, pre-dating the ruling application. - Timing / Sequence of Events:
The question was part of proceedings begun before the application for advance ruling was filed. The AAR held that once proceedings are pending or concluded, the bar applies and the AAR cannot entertain a parallel advance ruling. - Outcome:
Since the issue was embedded in earlier departmental proceedings, the Authority held the advance ruling application not admissible and accordingly rejected it.
Key Legal Principle Affirmed
✔ Advance ruling applications are not maintainable when the same question — in substance and legal scope — is already the subject of ongoing or completed departmental scrutiny/assessment against the applicant. This follows the statutory restriction in Section 98(2) of the CGST Act (as interpreted by the AAR).
This aligns with established practice that advance rulings are meant for clarifying future or proposed transactions and not for litigating issues already in adjudication or appeal.
Practical Takeaways
- A taxpayer should ideally apply for advance ruling before any notice, scrutiny, or assessment is initiated on the same question.
- If the department has already issued a show cause notice (SCN) or DRC-01/DRC-01A intimation on the same issue, the application may be rejected at admission stage.
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This ruling reinforces that AAR cannot act as a parallel adjudicatory forum to address disputes already being decided by proper officers.