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

The Hon’ble Calcutta High Court in the case of Sarkar Diesel v. Deputy Commissioner of State Tax [FMA No. 604 of 2024dated June 25, 2024] held that the 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.

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