Facts of the Case:

In this case, the applicant had executed a works contract prior to the implementation of GST on 1 July 2017. Although the contractual work stood completed in the pre-GST regime, disputes relating to payment were referred to arbitration, culminating in an arbitral award in 2023. Pursuant to the award, the applicant received various amounts and, while filing Form GSTR-3B, consciously treated such receipts as non-taxable on the premise that they represented compensation arising out of arbitration rather than consideration for any taxable supply.

Subsequently, the applicant approached the Advance Ruling Authority seeking a ruling on the GST implications of the amounts received under the arbitral award. The original Authority entertained the application and rendered an advance ruling. The matter reached the Appellate Authority, which examined whether such an application itself was maintainable under Chapter XVII of the CGST Act.

Issue:

Whether an application for Advance Ruling under Chapter XVII of the CGST Act is maintainable in respect of completed pre-GST transactions where the applicant has already received the amounts under an arbitral award, adopted a tax position by filing GST returns, and seeks post-facto confirmation of such treatment instead of obtaining advance certainty regarding a proposed or ongoing supply.

Held That:

The Appellate Authority observed that the advance ruling mechanism is intended to provide certainty regarding the GST implications of proposed supplies or supplies in the course of being undertaken, before disputes arise. It is not designed to validate a tax position that has already been consciously adopted and implemented in statutory returns after completion of the transaction.

In the present case, the contractual work had concluded before the GST regime, the arbitral award had already been received, and the applicant had already treated the receipts as non-taxable while filing Form GSTR-3B. The application therefore sought post facto confirmation of an existing tax position rather than advance certainty.

The Authority further held that determining the taxability of different components of the arbitral award would require detailed examination of contractual terms, arbitral proceedings, accounts, returns and supporting evidence, which falls within the jurisdiction of the proper adjudicating officer and not the advance ruling forum. Accordingly, the advance ruling was declared unsustainable and was set aside, while leaving the question of taxability open for examination by the jurisdictional proper officer in accordance with law.

Case name: In Re: M/s. Karam Chand Thapar & Bros (Coal Sales) Limited. dated 15.07.2026

To read the complete judgement 2026 Taxo.online 1965