Mahendra Singh Vs Assistant Commissioner State Tax And Others (Madhya Pradesh High Court)
AAR ruling of another distinct GSTIN holder even under same brand can’t be applied bindingly to a different GSTIN holder with an independent business: Madhya Pradesh High Court
The Madhya Pradesh High Court, in the case of Mahendra Singh v. Assistant Commissioner State Tax & Ors., ruled that an Advance Ruling (AAR) issued to one distinct GST-registered entity cannot be mechanically applied to another independent entity, even if they operate under the same brand name. The Petitioner, Mahendra Singh, proprietor of a pan shop under the ‘Karnawat Paan’ brand with a separate GSTIN and independent business, was issued a substantial tax demand, interest, and penalty by the Assistant Commissioner State Tax. The demand was based primarily on an AAR issued to Gulab Singh Chauhan, the head of the Karnawat Paan group, which disallowed composition scheme benefits to him and related entities on the grounds of dealing in restricted products like pan masala and tobacco.
The Petitioner contended that under Section 103 of the CGST Act, 2017, an AAR is binding only on the specific applicant and the concerned jurisdictional officers, and therefore, the ruling against Gulab Singh Chauhan was not legally binding on him as a distinct taxpayer. Despite the Respondent’s argument that the Petitioner was a “sister concern” due to the shared brand and familial relationship, the High Court emphasized that the Petitioner holds an independent GSTIN and PAN. The Court observed that the final demand order issued by the adjudicating authority was a non-speaking order, which simply dismissed the Petitioner’s reply as “not satisfactory” without providing any reasoned analysis or independent examination of the facts specific to the Petitioner’s business.
