GST Advance Ruling Digest for May 2026

Summary: This is a legal digest summarising GST Advance Ruling and Appellate Advance Ruling decisions delivered during May 2026 across multiple provisions of the CGST Act and IGST Act. The rulings cover input tax credit, blocked credits, classification of goods and services, exemptions, composite supplies, place of supply, reverse charge mechanism, intermediary services, zero-rated supplies, and maintainability of advance ruling applications. Key decisions include allowing ITC on statutory canteen services for regular employees while denying it for contract workers, permitting ITC on structural supports qualifying as plant and machinery, modifying ITC eligibility on Qualified Institutional Placement-related services based on fund utilisation, denying ITC for a captive solar power plant located away from the factory, classifying various products including AAC blocks, polypropylene packaging, mineral water, laundry soap, and Pooja Panneer under specific tariff entries, recognising exemption for fresh Isabgol seeds, treating certain logistics, food supply, licensing, intermediary and import of services according to their statutory character, and rejecting an advance ruling application as non-maintainable where proceedings on the same issue were already pending under Section 98(2) of the CGST Act.

These are the Advance Rulings Authority decisions under the various sections for the month of May 2026.

Section 16 & Section 17 of the CGST Act (Input Tax Credit, Apportionment, and Blocked Credits)

1. In re, Aditya Auto Products & Engineering India Pvt. Ltd. (2026) 43 Centax 343 (A.A.R. – GST – Kar.), Order No. KAR. ADRG 25/2026, decided on 19-05-2026

Section 17 deals with the apportionment of credit when goods/services are used partly for business and partly for other purposes, or partly for taxable and partly for exempt supplies. Section 17(5) specifies “blocked credits” where ITC is completely restricted, along with explanations defining “plant and machinery”. This AAR decision deals with Section 17(5)(b) of the CGST Act.

Decision:

• The applicant is eligible for ITC on GST charged by Canteen Service Providers (CSPs) for its regular employees since providing food facilities is a mandatory statutory obligation under Section 46 of the Factories Act, 1948.
• However, ITC is not admissible on canteen services attributable to contract workers, as there is no direct employer-employee relationship and no statutory obligation applies to the applicant for them.
• The Advance Ruling granted ITC for statutory obligations while restricting it for contract workers where no such obligation exists.
• The Advance Ruling Authority applied Circular No. 172/04/2022-GST dated 06.07.2022 that clarifies that the restriction imposed under Section 17(5)(b) is not applicable when an employer provides a facility or service to its employees to discharge a mandatory statutory obligation and Notification No. 11/2017-CTR dated 28.6.2017 where S. No. 7(iv) prescribes the GST rate for catering/restaurant services.
• This is a legally sound ruling that correctly applies the proviso to Section 17(5)(b) read with Circular No. 172/04/2022-GST. It establishes that the statutory obligation under the Factories Act directly enables ITC admissibility for regular employees, while the absence of this obligation blocks the credit for contract workers.

2. In re, Apar Industries Ltd, (2026) 43 Centax 344 (A.A.R. – GST – Guj.), Order No. GUJ/GAAR/R/2026/15, dated on 08-05-2026

Section 17 deals with the apportionment of credit when goods/services are used partly for business and partly for other purposes, or partly for taxable and partly for exempt supplies. Section 17(5) specifies “blocked credits” where ITC is completely restricted. Sections 17(5)(c) and (d) relate to the works contract and the construction of immovable property and the explanation of “plant and machinery”. This AAR decision deals with Sections 17(5)(c) and 17(5)(d) of the CGST Act.

Decision:

• The applicant is eligible for ITC on inputs and input services used for constructing a specialized vertical steel Continuous Catenary Vulcanization (CCV) tower.
• The AAR held that the tower functions as an essential structural support for the CCV machine line, thereby qualifying as “plant and machinery”.
• The AAR interpreted the Explanation to Section 17 of the CGST Act, which includes structural supports within “plant and machinery”.

The AAR applied the following circulars and judgements:

• Chief Commissioner of Central GST v. Safari Retreats (P.) Ltd, (2024) 23 Centax 62 (SC) which evaluated the functionality test and addressed whether constructed immovable property can be considered a plant under Section 17(5)(c) and (d).
• Bharti Airtel Ltd. v. CCE, (2024) 24 Centax 266 (SC) where it was held that mobile towers are accessories to antennas and eligible for credit under the functionality test.
• In re, Atriwal Amusement Park, 2020 40 GSTL 80 (AAR – M.P.) where it was held that foundation and support structures used to fasten water slides qualify as ‘Plant and Machinery’.
• In re, Coral Manufacturing Works India (P.) Ltd., (2023) 9 Centax 121 (App. AAR – T.N.) where ITC was allowed to structural support erected in relation to an overhead crane.
• In re, KEI Industries Ltd., (2025) 33 Centax 371 (App. AAR – Guj) where ITC was allowed on inputs and input services used for the construction of concrete towers supporting VCV lines.
• Circular No. 219/13/2024-GST dated 26.06.2024 which clarifies the availability of ITC on structural supports for plant and machinery under the GST framework.

Other Precedents relied on for determining the functional definition of ‘plant’:

• CIT v. Victory Aqua Farm Ltd., (2016) 16 SCC 553
• Modern Malleable Ltd. v. CCE, 2008 (225) E.L.T. 460 (Tri.-Cal)
• K. Tulsi & Sons v. CIT, 187 ITR 685 (Allahabad)
• CIT v. Dr. B. Venkata Rao, 243 ITR 81 (SC) dated 24th February 1999
• Anchor International Ltd. v. CIR, (2004) Scot CS 281,
• Cooke v. Beach Station Caravans, 1 WLR 1398,
• Inland Revenue Commissioners v. Barclay, (1969) 1 WLR 675
• Curle & Co. Ltd., (1969) 1 WLR 675
• State of Kerala v. Ambuja Cements Ltd., 2020 (1) KHC 884.
• By relying on the functionality test laid down by the Supreme Court in Chief Commissioner of Central GST v. Safari Retreats (P.) Ltd., the AAR has cemented the principle that civil structures exclusively and inextricably acting as structural supports to machinery cannot be subjected to the blanket blockage of Section 17(5)(c) and (d).

3. In re, Polycab India Ltd. (2026) 43 Centax 277 (A.A.R. – GST – Guj.) Advance Ruling No. GUJ/GAAR/R/2026/17, decided on 08-05-2026

Section 17 deals with the apportionment of credit when goods/services are used partly for business and partly for other purposes, or partly for taxable and partly for exempt supplies. Section 17(5) specifies “blocked credits” where ITC is completely restricted, along with explanations defining “plant and machinery”. This AAR decision deals with Section 17(5)(c) and (d) and Explanation to Section 17 of the CGST Act.

Decision:

• The applicant is eligible for ITC on inputs and input services used to construct a reinforced concrete Vertical Continuous Vulcanization (VCV) tower.
• The AAR ruled that the tower qualifies as an essential structural support exclusively meant for manufacturing cables using the VCV process.
• The AAR interpreted the Explanation to Section 17 of the CGST Act, which includes structural supports within “plant and machinery”.

The AAR applied the following circulars and judgements:

• In re, KEI Industries Ltd., (2025) 33 Centax 371 (App. A.A.R. – GST – Guj.) which held that an assessee is eligible to avail ITC on the inputs and input services used for the construction of a concrete tower to support and erect VCV lines.
• Circular No. 219/13/2024-GST dated 26.06.2024 which clarifies that ITC on structural supports to plant and machinery is not barred by Section 17(5).
• This ruling maintains judicial consistency within the State of Gujarat. The AAR drew an analogy from CBIC Circular No. 219/13/2024-GST, which clarified ITC admissibility for OFC ducts, to rule that essential structural supports for heavy machinery have the same relief from blocked credits.

4. In re, RHI Magnesita India Limited, Order-in-Appeal No. HAAAR/2023-24/05, decided on 22-05-2026

Section 16 deals with the eligibility and conditions for taking input tax credit (ITC). Section 17 deals with the apportionment of credit. This AAAR decision deals with Section 16(1) and Section 17 of the CGST Act.

Decision:

• The AAAR modified the AAR’s ruling.
• It was held that ITC is admissible on services availed for raising funds through a Qualified Institutional Placement (QIP) to the extent the funds were utilized for the repayment/pre-payment of borrowings. However, ITC on the portion of QIP proceeds invested in a subsidiary company was held to be not admissible.
• The AAAR analyzed the broad definition of “business” to allow credit for corporate debt restructuring while apportioning and denying credit for independent investment activities in a separate legal entity.

The AAAR applied the following circulars and judgements:

• Kranti Associates Pvt. Ltd. v. Masood Ahmed Khan, 2011 (273) ELT 345 (SC) which held that quasi-judicial orders must contain cogent reasons to prevent arbitrariness.
• Commr. v. Shukla & Brother, 2010 (254) ELT 6 (SC) which held that providing reasons can never be dispensed with in judicial/administrative orders.
• Signet Industries Ltd. v. State Tax Officer, (2024) 16 Centax 253 (Mad.) which quashed an unreasoned assessment order issued without application of mind.
• Belectric Photovoltaic India Pvt. Ltd. v. UOI, 2019 (21) G.S.T.L. 319 (M.P.) which held that non-exempt articles forming an integral part of an exempted solar power system are entitled to exemption.
• Rajkamal Textiles v. CC, 2018 (362) E.L.T. 216 (Mad.) which set aside an order passed without application of mind.
• CCE v. Fitwel Tools & Forgings (P) Ltd., 2010 (256) ELT 212 (Kar.) which held that cryptic, non-speaking orders by a Tribunal are legally infirm and must be remanded.
• Coca Cola India Pvt. Ltd. v. CCE, 2009 (15) S.T.R. 657 (Bom.) which held that the term ‘business’ is of wide import and includes activities directly related to manufacturing.
• Cinemax India Ltd. v. Union of India, 2011 (24) STR 3 (Guj.) which interpreted “in the course or furtherance of business” broadly.
• Hinduja Global Solutions Ltd. v. CCE, 2016 (42) S.T.R. 932 (Tri.-Bang) which allowed Cenvat credit on advisory and financial services used for raising finance to expand business operations.
• Steel Strip Wheels v. CCE, 2016 (42) S.T.R. 72 (Tri.-Del.) which allowed Cenvat credit on services availed for the private placement of shares to raise capital.
• Ahmednagar Forgings v. CCE, 2017 (6) G.S.T.L. 54 (Tri.-Mum.) and Krenex Microsystems v. CCE, 2016 (42) S.T.R. 533 (Tri.-Bang.) which supported credit availability on IPO/capital raising inputs.
• of C.EX., Cus. & S.T. v. GMR Industries Ltd., 2015 (38) S.T.R 72 (Tri.-Bang) which allowed credit for accounting and share registry services.
• M/s. Pipelie Energy Software India Pvt. Ltd. v. Deputy Commissioner of Income Tax, TS-481-HC-2024(TEL) which reiterated that holding and subsidiary companies are distinct legal entities and expenditure of one cannot be claimed by another.
• While the allowance of ITC for debt-repayment was granted, the denial of credit for investment in a subsidiary ignores established jurisprudence. As held by the Bangalore CESTAT in Hinduja Global Solutions Ltd. v. CCE, 2016 (42) S.T.R. 932 (Tri.-Bang), the term “business” is of wide import, and strategic investments or divestments are integral to overall business expansion. Denying this portion of the credit is a narrow interpretation of Section 16(1).

5. In re, SBF Ispat Private Limited, Order No. 02/2026-27, decided on 20-05-2026

Section 17 deals with the apportionment of credit when goods/services are used partly for business and partly for other purposes, or partly for taxable and partly for exempt supplies. Section 17(5) specifies “blocked credits”. This AAAR decision deals with Section 17(2) and Section 17(5)(c) and (d) of the CGST Act.

Decision:

• The AAAR upheld the AAR’s ruling denying ITC on inputs, capital goods, and services used in setting up a Solar Power Plant for captive consumption located away from the factory.
• The AAAR reasoned that since the electricity is transferred to the power grid (DISCOM), it is treated as an exempt supply, thereby blocking ITC under Section 17(2) and 17(5)(c)/(d).
• The AAAR ignored a long line of binding judicial precedents which hold that wheeling electricity through a state grid does not sever the nexus of captive consumption.

The AAAR applied the following circulars and judgements:

• Notification No. 02/2017-Central Tax (Rate) dated 28.06.2017 which prescribes nil rate of tax on the supply of electrical energy.

The AAAR ruled against the appellant and did not apply the following decisions:

• Commissioner of Central Excise and Service Tax v. M/s. Ashok Leyland Ltd., 2019 (369) E.L.T. 162 (Mad.) which affirmed Cenvat credit for windmill expenses located away from the factory.
• The Kisan Cooperative Sugar Factory Ltd. v. Commnr. Central Excise, 2023 (12) TMI 1303 Supreme Court which held that items used for plant maintenance are eligible for credit as they are “used in or in relation to manufacture”.
• Maruti Suzuki Ltd. v. Commissioner of Central Excise, 2009 (240) ELT 641 (S.C.) which held credit is eligible on inputs used for electricity generation for captive consumption.
• Vikram Cement v. CCE, 2006 (194) ELT 3 (SC) which held that inputs do not necessarily need to be used within the factory premises to be eligible for Cenvat credit.
• of C. Ex. Vadodara v. Gujarat State Fertilizers & Chem. Ltd., 2008 (229) ELT 9 (S.C.) & Collector of Central Excise v. Solaris Chemtech Limited, 2007 (214) ELT 481 (S.C.) which allowed Modvat credit for fuel used to generate captively consumed electricity.
• CCE & ST, Jaipur v. Shree Cement Limited, 2018 (16) G.S.T.L. 196 (Raj.) which allowed Cenvat credit on inputs used in a captive power plant even when excess electricity was cleared to sister concerns.
• M/s. India Cements Limited v. CCE & ST, 2024 (390) E.L.T. 170 (Mad.) which allowed the refund of reversed CENVAT credit on electricity wheeled out to sister units.
• Ajanta Transistors Clock Mfg. Co. v. Commissioner of Central Excise, (2026) 38 Centax 157 (Guj.) which held that input services for installing a captive windmill away from the factory are eligible for credit.
• M/s Hindustan Zinc Ltd. v. CCE & ST, 2026 (1) TMI 951 (CESTAT) which allowed credit on input services used in generating electricity, cleared to sister units.
• CCE& Cus, Aurangabad v. Endurance Technology Pvt. Ltd., 2015 (6) TMI 82 (Bombay High Court) which affirmed that denial of credit on windmills merely on the ground of geographical distance defeats the objective of the scheme.

Other Precedents on Captive Power Generation:

• of C.Ex.& Cus v. Indeos ABS Limited, 2010 (254) ELT 628 (Guj);
• Commissioner of Cus & Central Excise v. Jindal Polyester, 2014 (305) ELT 43 (All.);
• Principal Commissioner v. Indian Metal and Ferro Alloys Limited, 2024 (9) TMI 384 (Orissa HC);
• Thiagarajar Mills (P) Ltd v. Additional Commissioner (CT), Chennai, 2018 (15) G.S.T.L. 649 (Mad.);
• Rajhans Metals Pvt. Ltd. v. Commissioner of Central Excise, 2025 (11) TMI 1439 (Gujrat High Court);
• In re, M/s. Pristine Industries Limited, 2022 (2) TMI 1044 (AAR Raj);
• In re, M/s. Kumaran Oil Mill, 2020 (42) G.S.T.L. 247 (A.A.R. – GST – T.N.);
• In re, M/s. Grand Centre Mall, (2025) 33 Centax 64 (A.A.R. – GST – Ker.);
• In re, M/s. ShriKeshav Cements and Infra Limited, 2019 (31) G.S.T.L. 628 (A.A.R. – GST);
• In re, M/s. KLF Nirmal Industries (P) Ltd., (2023) 7 Centax 532 (A.A.R. – GST – T.N.).
• This ruling contradicts settled legal principles. The electricity generated was used exclusively for captive consumption to manufacture taxable steel products. The Gujarat High Court recently held in Ajanta Transistors Clock Mfg. Co. v. Commissioner of Central Excise, (2026) 38 Centax 157 (Guj.) that input services for a captive windmill are eligible for credit since the energy is used in relation to the final taxable product. The AAAR’s has also failed to apply the functional nexus test in the case.

Section 9 & Section 11 of the CGST Act (Levy, Collection, and Exemptions – Goods)

1. In re, Eco Green AAC Products (P.) Ltd., (2026) 43 Centax 290 (A.A.R. – GST – Guj.), Order No. GUJ/GAAR/R/2026/18, decided on 08-05-2026

Section 9 deals with the levy and collection of CGST on all intra-State supplies of goods and services at notified rates. This AAR decision deals with Section 9 of the CGST Act (Classification of Goods / Applicable Rate).

Decision:

• Autoclaved Aerated Concrete (AAC) bricks/blocks are classifiable under heading 6810 as articles of cement/concrete/artificial stone, rather than under 69041000 as ceramic building bricks.
• The AAR applied Chapter 69 Notes, noting ceramic products must be fired at 800°C or higher (AAC blocks are only autoclaved at 180-220°C).
• The AAR discarded the ‘specific over general’ argument since heading 6810 also contains a specific entry for building blocks.

The AAR applied the following circulars and judgements:

• CCE v. Simplex Mills Co. Ltd., 2005 (181) E.L.T. 345 (S.C.) which established the maxim that a specific entry prevails over a general residual entry.
• CCE, Guntur v. Ramdev Tobacco Company, 1991 (51) E.L.T. 631 (S.C.) which applied the doctrine of ejusdem generis.
• CCE v. Vicco Laboratories, 2005 (179) E.L.T. 17 (S.C.) & Indo International Industries v. Commissioner of Sales Tax, 1981 (8) E.L.T. 325 (S.C.) which reaffirmed the “common parlance” test for the classification of goods.
• Notification No. 14/2025-Central Tax (Rate) dated 17.09.2025 which prescribes concessional GST rates (12%) for specified construction materials, explicitly enlisting ‘Building bricks’ under tariff item 69041000.
• The AAR has applied the strict technical definitions over the applicant’s “common parlance” argument. By affirming that both 6810 and 6904 contain specific entries for “bricks”, the AAR has prioritized the material composition and manufacturing process as an important criteria for classification.

2. In re, Jai Hind Plastic, (2026) 43 Centax 347 (A.A.R. – GST – W.B.), Order No. 02/WBAAR/2026-27, decided on 25-05-2026

Section 9 deals with the levy and collection of CGST on all intra-State supplies of goods and services at notified rates. This AAR decision deals with Section 9 of the CGST Act (Classification of Goods).

Decision:

• Polypropylene (PP) packing boxes are classifiable under tariff item 39231090, but Polypropylene closures (stoppers, lids, caps) are classifiable under tariff item 39235090.
• The AAR classified the goods under Chapter 39 based on their physical nature and use as packaging articles.
• The AAR applied Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 which prescribes GST rates for goods.
• The Advance Ruling Authority adhered to the Chapter 39 Tariff Headings of the Customs Tariff Act, ensuring that distinct plastic articles for conveyance and packing were classified into specific 8-digit sub-headings.

3. In re, Jigneshkumar Narayandas Patel, (2026) 43 Centax 348 (A.A.R. – GST – Guj.), Order No. GUJ/GAAR/R/2026/21, decided on 29-05-2026

Section 11 gives power to the Government to grant exemptions from tax on the recommendation of the GST Council. This AAR decision deals with Section 11 of the CGST Act (Exemption from Tax).

Decision:

• Psyllium Seeds (Isabgol) supplied in their natural, raw, and unprocessed form directly from farmers without undergoing drying, freezing, or crushing qualify as “fresh” Isabgol seeds and are exempt from GST.

The AAR applied the following circulars and judgements:

• Notification No. 10/2025-Central Tax (Rate) dated 17.09.2025 which under Entry 87 (HSN 1211) exempts “Plants and parts of plants… fresh or chilled” and Entry 77 exempts ‘All goods of seed quality’.
• Notification 10/2025-CTR dated 17.9.2025 for interpreting “fresh” to include seeds sold exactly as harvested.
• Circular No. 163/19/2021-GST dated 06.10.2021 which provides clarifications on the classification and applicable GST rates for fresh vs dried agricultural products.

• The Advance Ruling Authority has relied on CBIC Circular No. 163/19/2021-GST, which clarifies that agricultural products supplied in their naturally harvested state (with inherent moisture) retain their “fresh” status. This protects primary agricultural supply from unintended taxation.

4. In re, Oxyhydra Beverages (P.) Ltd., (2026) 43 Centax 411 (A.A.R. – GST – Guj.), Order No. GUJ/GAAR/R/2026/16, decided on 08-05-2026

Section 9 deals with the levy and collection of CGST on all intra-State supplies of goods and services at notified rates. This AAR decision deals with Section 9 of the CGST Act (Classification / Levy and Collection).

Decision:

• Packaged black mineral water (purified water with added mineral salts and no added sugar, sweetener, or flavor) is classifiable under HSN 22011010 and is liable to 5% GST.
• The AAR relied on laboratory analysis proving the absence of sugar and flavor, for classifying the item.

The AAR applied Notification No. 09/2025-Central Tax (Rate) dated 17.09.2025 which specifies a 5% GST rate for waters, including mineral waters and aerated waters, not containing added sugar or flavoring under Sl. No. 146.

By relying on laboratory findings that confirmed the total absence of sugar and artificial flavoring, the AAR prevented the product from being put into the higher 18% slab for flavored beverages under HSN 2202.

5. In re, Swadeshi Soap Industries, (2026) 43 Centax 351 (A.A.R. – GST – W.B.) Order No. 01/WBAAR/2026-27, decided on 25-05-2026

Section 9 deals with the levy and collection of CGST on all intra-State supplies of goods and services at notified rates. This AAR decision deals with Section 9 of the CGST Act (Classification of Goods / Rates).

Decision:

• Laundry soap bars weighing less than 500 grams are classifiable under HSN 34011942 and attract 18% GST. They do not qualify for the 5% concessional rate applicable exclusively to “toilet soap”.
• The AAR utilized BIS standards and the “common parlance” test to distinguish laundry soap from toilet soap based on composition (Total Fatty Matter) and marketed use.

The AAR applied the following judgements and circulars:

• CCE, New Delhi v. Connaught Plaza Restaurant (P.) Ltd., 2012 (286) E.L.T. 321 (S.C.) which held that classification should rely on common and commercial parlance.
• State of Gujarat v. Prakash Trading Co., (1972) 30 S.T.C. 348 (S.C.) which interpreted whether specific brands of soap/shampoo qualified as toilet articles.
• Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 & Notification No. 09/2025-Central Tax (Rate) dated 17.09.2025 where Entry 251 of Schedule I taxes “toilet soap” at 5%, while Entry 66 of Schedule II taxes “soap, other than toilet soap” at 18%.
• In the State of Gujarat v. Prakash Trading Co., 1972, 30 STC, 348, it was held that marketing identity and distinct end-use matter heavily in classification disputes.This was relied on by the AAR to rule that a product marketed for laundry cannot become a toilet soap because they share basic traits.

6. In re, T.S.R. & Co., (2026) 43 Centax 448 (A.A.R. – GST – T.N.), Advance Ruling No. TN/46/ARA/2026, decided on 05-05-2026

Section 9 deals with the levy and collection of CGST on all intra-State supplies of goods and services at notified rates. Section 11 gives power to the Government to grant exemptions from tax. This AAR decision deals with Section 9 & Section 11 of the CGST Act (Classification and Exemption).

Decision:

• ‘Pooja Panneer’ (rose water infused with synthetic perfume) is not exempt as “Puja samagri” because it is not included in the exhaustive list of exempted items. It is classifiable under HSN 3301 90 79 with an 18% GST rate.
• The AAR applied statutory interpretation noting that the list of “Puja samagri” introduced by the word “namely” is exhaustive, not illustrative, and accurately classified the item under Chapter 33 Explanatory Notes.

The AAR applied the following circulars and judgements:

• Notification No. 02/2017-Central Tax (Rate) dated 28.06.2017 which was the initial notification providing the exemption for “Puja samagri”.
• Notification No. 10/2025-Central Tax (Rate) dated 17.09.2025 which superseded 2/2017 and maintains the exhaustive list of exempted “Puja samagri”.
• Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 which prescribes an 18% GST rate for aqueous solutions of essential oils.
• The applicant’s attempt to use the “end-use” theory failed here. Exemption notifications must be strictly construed. Since “rose water” is not named in the exhaustive list of exempted Puja samagri under the notification, the AAR denied the exemption.

Section 7, Section 8, Section 9 & Section 11 of the CGST Act (Scope of Supply, Levy, and Exemptions – Services)

1. In re, Flipkart India (P.) Ltd. (2026) 43 Centax 291 (App. A.A.R. – GST – W.B.) Appeal Case No. 06/WBAAAR/APPEAL/2026, decided on 06-05-2026

Section 9 and 11 govern the levy, collection, and exemptions for services. This AAAR decision deals with Section 9 & Section 11 of the CGST Act (Levy and Exemptions – Services).

Decision:

• The AAAR reversed the AAR’s ruling, determining that transportation arranged by an e-commerce trader through a hub-based sorting and last-mile delivery network is an integrated logistics/fulfillment service, not a Goods Transport Agency (GTA) service. Thus, the exemption for GTA services provided to unregistered customers is unavailable.
• The AAAR analyzed the economic reality and operational conduct over mere documentation (issuing a consignment note), confirming that the service fundamentally mimics a courier/logistics fulfillment service.

The AAAR relied on the following judgements and circulars:

• In re, Flipkart India (P.) Ltd., (2026) 38 Centax 30 (A.A.R. – GST – W.B.) which was the original AAR ruling that incorrectly classified the activity as a GTA service.
• Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 which exempts services provided by a GTA to unregistered persons.
• Circular No. 104/07/2008-ST dated 06.08.2008 & Circular No. 186/5/2015-ST dated 05.10.2015 which clarified that time-sensitive transportation by road qualifies as GTA service if a consignment note is issued.
• Circular No. 234/28/2024-GST Dated 11.10.2024 which clarified that incidental/ancillary services provided by a GTA are treated as part of a composite supply of transport.
• Cundy v. Lindsay, (1878) 3 App Cas 458 HL, Dresser Rand SA v. Bindal Agro Chem Ltd., AIR 2006 SC 871, Rickmers Verwaltung Gmbh v. Indian Oil Corporation Ltd. AIR 1999 SC 504, which examined foundational contract law regarding identity, formation of contracts, and commercial conduct.
• Hero Cycles (P.) Ltd. v. CIT (Central), Ludhiana, 2015 379 ITR 347 (SC) & CIT v. Dalmia Cement (P.) Ltd., 2002 254 ITR 377 (Delhi) which were cited regarding commercial expediency and business structures.
• Union of India v. Inter Continental (India), 2008 (226) E.L.T. 16 (S.C.) which is a precedent addressing restrictions imposed via circulars contrary to statutory notifications.
• Issuing a “consignment note” cannot convert a multi-modal network into a GTA. The ruling relies on this point and reverses the AAR decision.

2. In re, Frutta Services Private Limited, Order-in-Appeal No. AAAR/06/2026(AR), decided on 08-05-2026

Section 8 determines the tax liability on composite and mixed supplies. Section 9 governs the levy. This AAAR decision deals with Section 8 & Section 9 of the CGST Act (Composite Supply / Levy).

Decision:

• The AAAR upheld that supplying fresh food to corporate clients by procuring it from third-party kitchens and using logistics providers for delivery is a “composite supply of service” involving the supply of food (SAC 996337) and attracts 18% GST as per the residual entry.
• The AAAR applied the “dominant intention test,” deducing that extensive oversight over menu, quality, hygiene, and timing elevates the transaction to a composite service, not a mere supply of goods.

The AAAR applied the following circulars and judgements:

• BSNL v. Union of India, 2006 (2) S.T.R. 161 (S.C.) which laid down the “dominant intention test” for examining whether a transaction constitutes a sale of goods or a supply of services.
• Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 which prescribes rates for food/restaurant services; entry 7(vi) is the residual entry for other food and beverage services at 18%.
• Applying the dominant intention test as derived from BSNL v. Union of India case the recipient’s intention was not just to buy food, but to avail of an end-to-end catered logistics service. Thus, classifying it as a mere “supply of goods” to fetch a lower 5% rate was rejected by the AAAR.

3. In re, Rangaraj (Chelliah Rangaraj), (2026) 43 Centax 349 (A.A.R. – GST – T.N.) Advance Ruling No. TN/45/ARA/2026, decided on 05-05-2026

Section 7 defines the scope of “supply”. Section 11 governs exemptions. This AAR decision deals with Section 7 & Section 11 of the CGST Act (Scope of Supply / Exemptions).

Decision:

• The collection of an auction fee by a temple to grant the right/license to collect tonsured human hair constitutes a taxable supply of service (SAC 9997) under Section 7.
• The exemption for human hair as goods does not exempt the distinct service of licensing.
• The AAR differentiated between the exemption on the physical commodity and the taxation of the licensing right.

The AAR applied the following Notifications and judgements:

• Anmol Industries Ltd. v. West Bengal Authority for Advance Ruling, GST, 2023 (75) G.S.T.L. 46 (Cal.) which held that recipients of services, being registered under the Act, have the locus standi to file an application for advance ruling.
• Notification No. 10/2025-Central Tax (Rate) dated 17.09.2025 which exempts the supply of human hair as goods.
• Notification No. 11/2017-Central Tax (Rate) & Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 which provides general references for classifying and taxing/exempting services.
• The AAR drew a line between the physical sale of an exempt commodity (hair) and the intangible transfer of a commercial right (the license to collect it on temple premises). This ruling prevents the improper cross-application of goods-based exemptions onto service-based transactions.

Sections 12, 13 & 16 of the IGST Act (Place of Supply, Export/Import of Services, and Zero-Rated Supply)

1. In re, Maithani Enterprises, (2026) 43 Centax 248 (App. A.A.R. – GST – Haryana), HAAAR/2022-23/01, decided on 07-05-2026

Section 13 deals with the place of supply of services where either the supplier or recipient is outside India. Section 16 deals with Zero-Rated supplies. This AAAR decision deals with Section 13(8)(b) and Section 16 of the IGST Act (Place of Supply / Intermediary Services / Zero-Rated Supply).

Decision:

• Sales and marketing consulting provided by the Indian appellant to a Malaysia-based company, but performed alongside a local client team in India, classifies as an “intermediary service”. It is not an export of service and is taxable at 18% IGST without the benefit of zero-rating.
• The AAAR identified the three-party arrangement, finding the place of supply remained in India since the appellant acted on behalf of the Malaysian entity to facilitate supplies locally.

The AAAR applied the following judgements:

• GAP International Sourcing (India) (P.) Ltd. v. CST, 37 STR 757 (CESTAT-NEW DELHI) which held that services provided to a foreign entity consumed/used for business located abroad qualify as an export of services.
• In re, Universal Services India (P) Ltd v. CST, [Ruling No. AAR/ST/07/2016] which held that providing the main service on one’s own account excludes a person from the definition of an intermediary.
• In re, GoDaddy India Web Services (P.) Ltd., 2016 (46) S.T.R. 806 (A.A.R.) which ruled that providing marketing/branding services on a principal-to-principal basis does not make the provider an intermediary.
• In re, Vserv Global (P.) Ltd., 2018 (19) G.S.T.L. 173 (A.A.R. – GST) which held that providing back-office support services to facilitate supply between an overseas client and its customers constitutes intermediary services.
• This is a common friction point in GST. As the payment was received in convertible foreign exchange from Malaysia, the physical facilitation for an Indian end-client brings the applicant under the “intermediary” net of Section 13(8)(b). This is consistent with rulings like Vserv Global (P.) Ltd., though it is often disadvantageous to domestic service exporters.

2. In re, Sampurnam Hosieries Impex Pvt. Ltd., (2026) 43 Centax 350 (A.A.R. – GST – T.N.), Advance Ruling No. TN/43/ARA/2026, decided on 04-05-2026

Section 2(11) deals with import of services, and Section 13 deals with place of supply. This AAR decision deals with Section 2(11) and Section 13 of the IGST Act (Import of Services / Place of Supply / Reverse Charge Mechanism).

Decision:

• Commission paid to a foreign director is an import of services taxable under Reverse Charge Mechanism (RCM).
• Commission to foreign marketing agents acting as intermediaries has a place of supply outside India (no GST).
• Payments to foreign C&F agents for export consignments constitute an import of services taxable under RCM.
• The AAR applied Place of Supply provisions under the IGST Act, separating pure intermediary facilitation abroad from direct imports of services by an Indian entity.

The AAR applied Notification No. 10/2017-Integrated Tax (Rate) dated 28.06.2017 which notifies categories of services on which tax is payable on a reverse charge basis (RCM), including services supplied by a person in a non-taxable territory to a person in the taxable territory.

The AAR has differentiated between the roles of the foreign entities. Recognizing the foreign commission agent’s place of supply as being outside India protects Indian exporters from unnecessary RCM burdens, promoting ease of doing cross-border business.

Section 98 of the CGST Act (Procedure on Receipt of Application)

1. In re, Sky Height Enclave Pvt. Ltd., (2026) 43 Centax 471 (A.A.R. – GST – W.B.), Order No. 03/WBAAR/2026-27, decided on 25-05-2026

Section 98(2) dictates the statutory bar on admitting advance ruling applications. This AAR decision deals with Section 98(2) of the CGST Act.

Decision:

• The application seeking an advance ruling on ITC admissibility for hotel construction was rejected as non-maintainable because an enforcement case regarding the identical issue had already been initiated by jurisdictional authorities.
• The AAR invoked the absolute statutory bar under Section 98(2) of the CGST Act which prohibits giving a ruling when the same matter is already pending in proceedings.

The AAR applied the statutory text of Section 98(2) of the CGST Act, which strictly prohibits admitting such an application.

Section 98(2) places an absolute statutory embargo on admitting advance ruling applications if the questions raised are already pending or decided in any proceedings under the Act. The AAR has prevented the applicant from using the Advance Ruling mechanism to bypass an active enforcement investigation.