Observations on ITC by AAAR Beyond Appeal Grounds Expunged by Rajasthan High Court

Case Summary:

• Case Title: Tej Jain v. Chief Commissioner of CGST, Jaipur Zone & Others

• Court: High Court of Judicature for Rajasthan, Bench at Jaipur

• Petition Number: D.B. Civil Writ Petition No. 12624/2022

• Relevant Section: Section 97–101 of CGST Act, 2017

• Category of Dispute: Advance Ruling – Input Tax Credit and Valuation

• Date of Judgment: 30/05/2025

• Relevant Notifications: Notification No. 08/2018 – Central Tax (Rate) dated 25.01.2018

Facts of the Case (¶1–¶5):

• The petitioner, Tej Jain, sought an advance ruling on whether the amount paid to the owner of a used car and the refurbishment cost can be deducted from the selling price for margin calculation under Notification No. 08/2018-CT(R). (¶3)

• The AAR ruled against the petitioner, holding that such deductions are not permissible. (¶4)

• On appeal, the AAAR upheld the AAR’s decision but included observations in Para 6.8 discussing the ineligibility of ITC if benefits of Notification No. 08/2018-CT(R) are availed. (¶5)

Question(s) in Consideration (¶3, ¶6):

• Whether AAAR exceeded its jurisdiction by commenting on Input Tax Credit in Para 6.8, which was not a ground of appeal?

• Whether such an observation should be struck down, considering it was beyond the scope of the original application?

Observations of the Court (¶6–¶9):

• The High Court noted that the issue of ITC was not part of the original question posed to the AAR or raised in the grounds of appeal before the AAAR. (¶6–¶7)

• The respondent could not dispute this position during arguments. (¶8)

• The court observed that Para 6.8 of the AAAR order went beyond the scope of appeal and contained unnecessary observations on ITC eligibility. (¶9)

Judgment of the Court (¶10–¶11):

• While the overall order of the AAAR was upheld, the court expunged the observations made in Para 6.8 of the AAAR order as being beyond the scope of the appeal. (¶10)

• The writ petition was partly allowed to the extent of setting aside these remarks. (¶11)

Between Fine Lines:

• The appellate authority must strictly confine itself to the grounds raised in appeal.

• Any unrelated remarks, even if legally valid, are liable to be struck off if not germane to the appeal.

• ITC considerations must be rooted in actual dispute and procedural context.

• The benefit under Notification No. 08/2018 is optional and ITC eligibility must be discussed only when specifically questioned.

• Courts safeguard procedural propriety in quasi-judicial rulings under the CGST framework.

Summary of Referred Cases:

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