Advance Ruling under GST

Advance ruling means a decision provided by the Authority or the Appellate Authority or National appellate authority to an applicant on matters or on questions specified in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. Applicant means any person registered or desirous of obtaining registration under the Act.

Advance Ruling can be obtained for the below purposes:

  • classification of any goods or services or both
  • applicability of a notification issued under the provisions of CGST Act
  • determination of time and value of supply of goods or services or both
  • admissibility of input tax credit of tax paid or deemed to have been paid.
  • determination of the liability to pay tax on any goods or services or both
  • whether applicant is required to be registered
  • whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term.

However, AAR will not consider matters that are already pending or decided in any proceedings in the case of an applicant.

Authority and Appellate Authority for Advance Ruling

The Government shall appoint officers not below the rank of Joint Commissioner as member of the Authority for Advance Ruling.

Both AAR & AAAR is constituted under the respective State/Union Territory Act and not the Central Act, thereby restricting the ruling applicability within the jurisdiction of the concerned state or union territory. Hence, determination of place of supply cannot be raised with the AAR or AAAR.

Powers and Procedures of AAR and AAAR

  • The AAR and AAAR are vested with the powers of a civil court for discovery and inspection, enforcing the attendance of a person and examining him on oath, issuing commissions and compelling production of books of account and other records.
  • Any proceedings before the authority shall be deemed to be judicial proceeding.
  • The AAR and AAAR also have the power to regulate their own procedure.

Procedure for obtaining Advance Ruling

A copy of the advance ruling duly signed by members and certified in prescribed manner shall be sent to the applicant, the concerned officer and the jurisdictional officer.

Appeals against AAR order with AAAR

  • When the aggrieved applicant or Concerned/Jurisdictional officer of CGST/SGST do not agree with AAR order, they can file an appeal with AAAR within 30 days from the receipt of such ruling. This time limit may be extended for an additional 30 days on account of sufficient reason for delay in filing application.
  • Fees applicable for filing appeal is INR 10,000/-. However, no such fee is required to be paid for appeal filed by concerned/jurisdictional officers.
  • The Appellate Authority must pass an order within a period of 90 days of the filing of an appeal.
  • If the AAAR members differ on any point referred in appeal, it is deemed that no advance ruling is issued under appeal. The said authority can either confirm or modify the ruling appealed against.
  • A copy of the advance ruling pronounced should be signed by the members, certified in the prescribed manner, and communicated to the applicant, the concerned / jurisdictional officer and to the Authority.

Rectification of Mistakes

  • The law gives power to AAR & AAAR to amend their order to rectify any mistake apparent from the record within 6 months from the date of the order.
  • Such mistake may be noticed by the authority suo-moto or maybe brought to notice by the applicant or the concerned or the jurisdictional officer.
  • If rectification has effect in the tax liability or input tax credit, the applicant must be heard before the order is passed.

Applicability of Advance Ruling

  • An advance ruling is not applicable to similarly placed other taxable persons in the State. It is only limited to the person who has applied for an advance ruling.
  • It shall be binding till the period when the law, facts or circumstances supporting the original advance ruling have not changed.

Advance ruling to be void in certain circumstances

  • If the Authorities find that the advance ruling has been obtained by the applicant by fraud or willfull misrepresentation, it may declare such ruling to be void ab-initio.
  • Consequently, all the provisions shall apply to the applicant as if such advance ruling had never been made (but excluding the period when advance ruling was given and up to the period when the order declaring it to be void is issued).
  • An order declaring advance ruling to be void can be passed only after hearing the applicant/ appellant.
  • A copy of the order shall be sent to the applicant, the concerned officers, and the jurisdictional officer.

Amendment in Finance Act 2019

  • National Appellate Authority for Advance Ruling was constituted.
  • The advance ruling pronounced by the National Appellate Authority unless there is a change in law or facts, shall be binding on:
    • the applicants being distinct person and all registered persons having the same PAN or
    • the concerned officer or jurisdictional officers in respect of the above-mentioned persons.

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