Service Recipient Lacks Locus Standi to Seek Advance Ruling

Service Recipient Lacks Locus Standi to Seek Advance Ruling on Inbound Supplies but Allowed to Withdraw Application

Issue

Whether a recipient of services can validly maintain an application for an Advance Ruling under Sections 95 and 97 of the GST Act regarding the taxability or exemption of inward supplies (such as transport and land leasing), or whether the right to seek an advance ruling is restricted solely to the supplier of those goods or services.

Facts

The Business: The applicant is a registered assessee engaged in the poultry farming and egg production sector, operating through a network of owned and leased farms where eggs are packed without further processing.
The Queries: The applicant filed an application before the Authority for Advance Ruling (AAR) to clarify the taxability, exemptions, and potential Reverse Charge Mechanism (RCM) applicability on two specific inbound services:
1. The transportation of eggs by road and rail.
2. The leasing of agricultural land (with or without sheds) used for sheltering and grazing hens.
The Jurisdictional Flaw: Upon scrutiny, the AAR noted that the applicant was the recipient of these transport and leasing services, not the provider.
The Rejection Notice: Because the primary tax liability and invoicing obligations rested with the third-party suppliers, the AAR issued a notice proposing to reject the application as legally non-maintainable.
The Withdrawal: Acknowledging the statutory limitation, the applicant accepted the department’s position and formally requested to withdraw the application before a final rejection order was passed.

Decision

Application Inadmissible: The Authority for Advance Ruling held that under Section 95(a) read with Section 97(2) of the GST Act, an advance ruling can be sought only in relation to the supply of goods or services being undertaken or proposed to be undertaken by the applicant themselves.
Disposed as Withdrawn (In Favor of Revenue): Since a recipient cannot file an application for regular inward supplies where the tax liability rests with the supplier, the application was ineligible for admission. Accepting the applicant’s subsequent request, the AAR disposed of the matter as withdrawn without examining the technical merits of the egg transportation or leasing exemptions.

Key Takeaways

No Standing for Service Recipients: The GST advance ruling framework is strictly an “outward supply” mechanism for the applicant. A buyer or recipient of services does not have the locus standi (legal standing) to seek a ruling on the tax classification or exemptions of a vendor’s invoices, unless it explicitly falls under a mandated Reverse Charge Mechanism (RCM) where the recipient is legally deemed the person liable for paying the tax.
Strategic Voluntary Withdrawal: When confronted with a jurisdictional or maintainability defect (such as filing as a recipient), it is common practice for applicants to voluntarily withdraw the application. This prevents an adverse, binding rejection order from being recorded on the merits of the asset’s taxability.
Strict Construction of Section 95(a): The phrase “in relation to the supply of goods or services being undertaken or proposed to be undertaken by the applicant” is interpreted narrowly. It locks out academic or third-party interpretations, ensuring that only the actual person executing the supply can seek binding tax certainties.

AUTHORITY FOR ADVANCE RULING , TAMILNADU BENCH

Umapathy Poultry Farms, In re*

C. Thiyagarajan, Member (Central Tax)
and B. Suseel Kumar, Member (State Tax)

Advance Ruling No. 13 (ARA) of 2026

FEBRUARY 27, 2026

1. M/s. UMAPATHY POULTRY FARMS No. 4/22, Nasuvampalayam, Venkittapuram P.O. Palladam, Tiruppur, Tamil Nadu – 641 664 (hereinafter ‘the Applicant’) are registered under the GST Act with GSTIN: 33AAHPU1292P1Z4. The applicant is involved in poultry farming, where eggs are produced, packed into boxes, and sold without undergoing any process. The packaging is customized according to customer requirements and quality specifications. No processing is performed on the eggs. Poultry farming operations are carried out on both owned and leased farms. In this regard, the applicant has sought advance ruling on the following questions:

Q1. Is the transportation of eggs through GTA services exempt, and do the RCM provisions apply in this case?

Q2. Is the transport of eggs via railway services exempt?

Q3. Is the lease of agricultural land for grazing hens exempt, and do the RCM provisions apply?

Q4. Is the use of land along with a poultry shed for sheltering birds exempt, and are RCM provisions applicable?

2. The Applicant has made a payment of application fees of Rs. 5,000/- each under sub rule (1) of Rule 104 of CGST Rules, 2017 and SGST Rules, 2017.

3. Statement of relevant facts:

3.1 The applicant operates a poultry farming business focused on egg production. The eggs are packed into boxes and sold without any processing. The packaging is made to meet customer requirements and quality standards. The poultry farming activities are conducted on a mix of owned and leased farms.

4. Interpretation of Law by the Applicant based on the statement of facts:

4.1 The applicant submits relevant extract of exemption Notification No. 12/2017-CT(R) of CGST Act, 2017, as follows:

“agricultural produce” means any produce out of cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products, on which either no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market”

4.2 The applicant is of the view that, since the eggs are obtained through animal rearing and on which no additional processing is done by the applicant, they can be appropriately classified as “agricultural produce”.

5.1 The applicant falls within the administrative jurisdiction of ‘STATE’. Remarks has been received from the State jurisdictional authorities and informed that there are no pending proceedings against the applicant on the questions raised by them in their advance ruling application.

5.2 No remarks have been received from Central jurisdictional authorities. Hence, it is construed that there are no pending proceedings against the applicant on the questions raised by them in their advance ruling application.

6. PERSONAL HEARING

6.1 The applicant was given an opportunity to be heard in person on 01.09.2025 vide this office memorandum No. 10/ARA, dated 22.08.2025. The applicant through email dated 29.08.2025 have replied that they are unable to attend the hearing on the specified date, since their authorized representative was unavailable on the said date and requested adjournment for 15 days.

6.2 Accordingly, the applicant was given another opportunity of personal hearing on 23.09.2025 vide this office memorandum No. 10/2025, dated 10.09.2025. Mr. R. Jothilingam, Accounts Manager of M/s. Umapathy Poultry Farms, Mr. S. Harishankar, Chartered Accountant and Mr. S. Pradeep, Chartered Accountant appeared as Authorized Representatives of the applicant. The AR reiterated the submissions made in their application for advance ruling.

6.3 The AR informed that they are cleaning and packing the eggs and transporting them to dealers situated all over India. They informed that they use cardboard packing box for packing the eggs; that they use various packages having labelling and branding of the customers for packing the eggs as per the requirements of their customers. The AR also informed to the Members that the Goods Transporters and the Railway authorities had told them that they need to pay the GST on the transportation of eggs on the Reverse Charge Mechanism basis, so they have filed the present application for clarification on the issue. Further, the AR informed that they have poultry shed on land owned by them and also on land taken on lease basis for the purpose of erecting poultry shed.

6.4 The Members asked the AR to provide copies of the Lease Contract/Agreement copies entered with land owners for which the AR agreed to provide the same at the earliest. In the end, they stated that they have nothing more to add.

7. DISCUSSION AND FINDINGS:

7.1 We have carefully examined the submissions made by the applicant in their advance ruling application and the additional documents submission made after the personal hearing. The applicant has sought advance ruling on the following questions:

Q1. Is the transportation of eggs through GTA services exempt, and do the RCM provisions apply in this case?

Q2. Is the transport of eggs via railway services exempt?

Q3. Is the lease of agricultural land for grazing hens exempt, and do the RCM provisions apply?

Q4. Is the use of land along with a poultry shed for sheltering birds exempt, and are RCM provisions applicable?

7.2 In this regard, the provisions of Section 95 of the CGST Act, 2017 are reproduced below for reference

(a)

“advance ruling” means a decision provided by the Authority or the Appellate Authority or the National Appellate Authority to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub-section (1) of Section 100 or of section 101C, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant;

7.3 From the applicant’s submission, it is understood that the applicant is recipient of the services namely transportation of goods by Road, transportation of goods by Rail, leasing of agricultural land with or without shed or for grazing and sheltering hens. As per Section 95 (a) of the CGST Act, 2017, decision can be provided by the Authority on questions relating to the services being undertaken or proposed to be undertaken by the applicant. In the instant case, the applicant is a recipient of services mentioned in his questions. Therefore, this Authority is not in a legal position to provide decision on the questions raised by the applicant.

7.4 Further, vide SI. No. 13 of the application for advance ruling filed by the applicant, the applicant has indicated that the said query falls under the scope of ‘Determination of the liability to pay tax on any goods or services or both’ and ‘Applicability of notification issued under the provisions of this Act’. However, from the submissions made, it is seen that the applicant is recipient of the services mentioned by them in the questions. Therefore, the determination of the liability to pay tax vests with the suppliers of such services and not with the applicant. Accordingly, as the assessment to tax does not relate to the applicant and since they are only a recipient of service, the application is not liable for admission.

7.5 In view of the above, a notice dated 30.10.2025, had been issued to the applicant with a request to offer his reply/comments, as to why their application should not be rejected on the aforesaid grounds.

7.6 In reply to the notice, the applicant in their letter dated 26.11.2025 have stated that upon further review by them, it was noted that the determination of the liability to pay tax vests with the supplier of the goods/services. As the responsibility for assessing and discharging the applicable tax rests with the suppliers, the matter does not fall within the scope of an Advance Ruling application filed them as the recipient. Hence, requested the Hon’ble Advance Ruling Authority to permit them to withdraw the Advance ruling application filed by them.

7.7 After due consideration, the aforementioned letter of the applicant, wherein they have requested to permit withdrawal of the Advance ruling application filed by them and as they do not wish to pursue it any further, is taken on record. Hence, their request is considered and the application is allowed to be treated as withdrawn without going into the merits or detailed facts of the case.

8.0 In view of the above, we rule as under:

RULING

The ARA Application received from the applicant on 10.02.2025 is disposed as withdrawn as per the request of the applicant.