90-Day Limit for AAAR Orders is Directory, Not Mandatory: Rajasthan High Court Refuses to Interfere in GST Advance Ruling Appeal

The Rajasthan High Court has held that the statutory 90-day period prescribed for disposal of appeals by the Appellate Authority for Advance Ruling (AAAR) is directory in nature and not mandatory, and cannot automatically extinguish the right of appeal. A Division Bench comprising Justice Arun Monga and Justice Sunil Beniwal has dismissed a writ petition challenging the maintainability of departmental appeals against an Advance Ruling on the GST treatment of free-of-cost (FOC) diesel supplied by service recipients to Goods Transport Agencies (GTAs). The dispute originated from an application filed by Giri Transport Company under Section 97 of the Rajasthan GST Act seeking an advance ruling on whether the value of diesel supplied free of cost by the service recipient should be included in the taxable value of transportation services. The Rajasthan Authority for Advance Ruling (AAR) had ruled in June 2022 that the value of such diesel was not includable in the taxable value of goods transport services. Interestingly, during the AAR proceedings, the jurisdictional State GST officer had reportedly supported the transport company’s stand and stated that GST was not leviable on such FOC diesel where the goods remained within the contractual scope of the recipient. Following the ruling, both the CGST and SGST authorities filed appeals before the Appellate Authority for Advance Ruling. The transport company challenged the maintainability of these appeals on multiple grounds including limitation, lack of jurisdiction, procedural defects, contradiction in departmental stand, and expiry of statutory timelines for disposal. The petitioner argued that Section 101(2) of the GST law requires the Appellate Authority to decide appeals within ninety days and that the use of the word “shall” made the timeline mandatory. According to the petitioner, since proceedings remained inactive for over a year, the appeals should be considered extinguished. The company also argued that appeals had been filed beyond limitation and that the department could not be allowed to adopt contradictory positions after previously supporting the petitioner before the AAR. The tax authorities, however, countered that the 90-day provision was merely directory because the law prescribed no consequences for delay. They further argued that diesel is an essential component of transportation services and that free-of-cost diesel supplied by customers falls within the definition of “consideration” under GST law and therefore forms part of taxable value. Reliance was placed upon judicial precedents, including a Chhattisgarh High Court decision which had taken the view that FOC diesel should be included in GTA service value for GST purposes. The High Court agreed with the reasoning adopted by the Appellate Authority and held that delay in adjudication by a quasi-judicial authority does not automatically nullify proceedings. The Court observed that the GST statute does not provide for automatic lapse of appeals if the 90-day period expires. It held that the absence of a penal consequence strongly indicated that the provision was directory rather than mandatory. The Bench noted that adopting the petitioner’s interpretation would lead to an absurd result by destroying a statutory right of appeal merely because of passage of time. According to the Court, a provision intended to facilitate appellate review cannot be interpreted in a manner that defeats its own purpose. On the issue of limitation, the Court upheld the Appellate Authority's finding that the appeals were filed within permissible periods after considering dates of actual receipt of the ruling by departmental officers. The Court accepted that the CGST authority had filed its appeal within the outer permissible limit of sixty days and that delay had been validly condoned. The Court also rejected the argument that the CGST authority lacked standing to file an appeal. It held that under the GST framework, the “concerned officer” and “jurisdictional officer” are distinct authorities and both possess independent statutory rights to challenge advance rulings. Addressing the allegation that the department had taken a U-turn after supporting the petitioner before the AAR, the Bench reiterated the established principle that there can be no estoppel against the State in matters involving taxation and statutory duties. It observed that a position adopted by a subordinate officer without proper approval cannot permanently bind the government. The Court further noted that the impugned order merely rejected preliminary objections and directed the petitioner to participate in the appeal proceedings. It observed that instead of contesting the matter on merits, the petitioner had approached the High Court repeatedly on technical grounds, which appeared to be an attempt to delay final adjudication. The Rajasthan High Court dismissed the writ petition and directed the transport company to participate in the appellate proceedings before the AAAR. Case Details Case Title: M/s Giri Transport Company Versus The Appellate Authority For Advance Ruling Citation: JURISHOUR-1396-HC-2026(RAJ) Case No.: D.B. Civil Writ Petition No. 13071/2024 Date: 20/05/2026 Counsel For Petitioner: Sanjay Jhanwar, Sr. Advocate Counsel For Respondent: Mahaveer Bishnoi, AAG Click Here To Read Order Read More: IBC Overrides Income Tax Act, But Dept. Can Determine Dues During Liquidation Proceedings: ITAT

90-Day Limit for AAAR Orders is Directory, Not Mandatory: Rajasthan High Court Refuses to Interfere in GST Advance Ruling Appeal

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