In re Shridhar Deshpande (GST AAR Karnataka)
Bengaluru – An application seeking clarity on the Goods and Services Tax (GST) classification and rate for a product marketed as a “Heabal Tea Cigarette” has been rejected by the Authority for Advance Ruling (AAR) in Karnataka. The rejection was based purely on procedural grounds, specifically the legal prohibition against the AAR admitting applications where the question raised is already pending before another forum, in this case, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT).
The applicant, M/s. Shridhar Deshpande, operating as M/s. Heabal India Incorporation, had approached the AAR to determine the correct classification under the GST tariff and the applicable rate of tax for their product, “Heabal Tea Cigarette.” The company, stated to be a subsidiary of M/s Heabal Tech headquartered in South Korea, introduced this product to the Indian market, describing it as being designed to assist individuals in quitting smoking.
Businesses frequently seek advance rulings under the GST regime to gain certainty regarding tax liabilities, classification of goods or services, applicability of notifications, valuation principles, or eligibility for input tax credit, among other matters. The mechanism, governed by Section 97 of the Central Goods and Services Tax (CGST) Act, 2017, allows taxpayers to obtain a binding ruling from the AAR on specific questions pertaining to prospective transactions or activities. The objective is to provide clarity, avoid potential disputes, and ensure compliance with the complex indirect tax laws.
