In the matter of Erode Infrastructure Pvt. Ltd., the appellant was incorporated with the sole objective of development of “Multifunctional Complex” at Erode Railway Station, a project of Rail Land Development Authority (M/S RLDA) for furtherance of business. 

It was awarded lease of the land situated at the Erode Railway Station for Long term Lease of 45 years for development of a Multi functional Complex for the usage of railway passengers and return of the asset on the expiry of lease. 

It filed an application for advance ruling to determine whether upfront lease amount paid to M/s. RLDA for the development of Multi-functional complex at Erode railway Junction for Long term lease for 45 years would be exempt under GST.

The Authority for Advance Ruling rejected the application on the ground that a ruling can be obtained for the supplies undertaken or proposed to be undertaken by the applicant i.e. the applicant is the supplier in the supply in question. However, the supply based on the lease agreement between the applicant and RLDA for which the applicability of the exemption is sought is not undertaken or proposed to be undertaken by the applicant. It filed appeal against the order.

The Appellate Authority for Advance Ruling observed that in terms of lease agreement entered into between appellant and Rail Land Development Authority (RLDA), the supplier was RLDA and recipient was appellant who was taking land on lease from RLDA for a fixed tenure and using it as per terms and conditions of lease agreement. 

As per section 103 of CGST Act, the ruling pronounced is binding only on the appellant. It automatically flows that if a recipient obtains a ruling on the taxability of his inward supply of goods or services, the supplier of such goods or services is not bound by that ruling and he is free to assess the supply according to his own determination, in which case, the ruling loses its relevance and even applicability. 

Therefore, it was held that a supplier in the capacity of a recipient of his inward supplies only and not vice versa would be only eligible to seek an advance ruling and not a mere recipient of goods or services in question even when he may otherwise be a supplier of his own goods or services. The Appellate Authority for Advance Ruling confirmed the order of the Advance Ruling Authority and appeal disposed off.