An Advance Ruling helps the applicant in planning his activities, which are liable for payment of GST, well in advance. It also brings certainty in determining the tax liability, as the ruling given by the Authority for Advance Ruling (AAR) is binding on the applicant as well as Government Authorities. Further, it helps in avoiding long drawn and expensive litigation at a later date. Seeking an Advance Ruling is inexpensive and the procedure is simple and expeditious. It thus provides certainty and transparency to a Taxpayer with respect to an issue which may potentially cause a dispute with the Tax Administration. A legally constituted body called Authority for Advance Ruling (AAR) can give a binding ruling to an applicant who is Registered Taxable Person or is liable to be registered. The Advance Ruling given by the AAR can be appealed before an Appellate Authority for Advance Ruling (AAAR).
“Advance Ruling” means a decision provided by the Authority or the 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 of the CGST Act/MGST Act, 2017, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.
Subject to the provisions of Chapter XVII, for the purposes of this Act, the Authority for advance ruling constituted under the provisions of a State Goods and
Services Tax Act or Union Territory Goods and Services Tax Act shall be deemed to be the Authority for advance ruling in respect of that State or Union territory.
As per Rule 103 of CGST/MGST Rules, 2017, the qualification and the appointment of Members of the Authority for Advance Ruling is decided by the Government. The Central Government and the State Government shall appoint officer of the rank of Joint Commissioner as the Member of the Authority for Advance Ruling.
In Maharashtra State there are two Members appointed by Government not below the rank of Joint Commissioner as member of the Maharashtra Authority for Advance Ruling, one Member from Central Government and another from State Government. The Advance Ruling Bench is constituted by Government by passing of Notification in November 2017 (No. MGST-1017/CR 193/Taxation-1 Dt.). Please click here (English / Marathi) to view the above mentioned Notification. Details of the Maharashtra Authority for Advance Ruling is also available on the portal of Goods and Services Tax Council www.gstcouncil.gov.in/advance-rulings.
A legally constituted body called Authority for Advance Ruling (AAR) can give a binding ruling to an applicant who is a registered person or is desirous of obtaining registration. The Advance Ruling given by the Authority can be appealed before an Appellate Authority for Advance Ruling (AAAR). There are time lines prescribed for passing an order by Authority for Advance Ruling and by AAAR.
The broad objectives for setting up a mechanism of Advance Ruling include:
i) provide certainty in tax liability in advance, in relation to an activity proposed to be undertaken by the applicant;
ii) attract Foreign Direct Investment (FDI);
iii) reduce litigation;
iv) pronounce ruling expeditiously in transparent and inexpensive manner.
Applicant should file an application in reference to the section 97 (2) of CGST Act/MGST Act for the question on which the Advance Ruling is sought under this Act, shall be in respect of jurisdictional officer or an applicant aggrieved by any advance ruling pronounced by the Authority.
(a) Classification of any goods or services or both;
(b) Applicability of a notification issued under the provisions of CGST Act;
(c) Determination of time and value of supply of goods or services or both;
(d) Admissibility of input tax credit of tax paid or deemed to have been paid;
(e) Determination of the liability to pay tax on any goods or services or both;
(f) Whether applicant is required to be registered;
(g) 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.
Section 100(1) of the CGST Act/MGST Act, 2017 provides that concerned officer, the jurisdictional officer or an applicant aggrieved by any advance ruling pronounced by the Authority for Advance Ruling, may appeal to the Appellate Authority for Advance Ruling. Thus, it can be seen that a decision of the Appellate Authority is also treated as an Advance Ruling.
An Advance Ruling pronounced by Authority for Advance Ruling (AAR) or Appellate Authority for Advance Ruling (AAAR) shall be binding only on the applicant who has sought the Advance Ruling and on the concerned officer or the jurisdictional officer in respect of the applicant. It is only limited to the person who has applied for an Advance Ruling.
The law does not provide for a fixed time period for which the ruling shall apply. Instead, it has been provided that Advance Ruling shall be binding till the period when the law, facts or circumstances supporting the original Advance Ruling have not changed.
However, an Advance Ruling shall, by an order passed by the AAR/AAAR, be declared to be ab initio void if the Authority for Advance Ruling or AAAR finds that the Advance Ruling was obtained by the applicant by fraud or suppression of material facts or misrepresentation of facts. In such a situation, all the provisions of the CGST/MGST Act 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 providing an opportunity of hearing to the applicant.
The applicant desirous of obtaining Advance Ruling should make an application to Authority for Advance Ruling in a prescribed form and manner.
The format of the form and the detailed procedure for making application have been prescribed in Rule 104 of the CGST/MGST Rules, 2017. An application for obtaining an Advance Ruling under sub-section (1) of Section 97 shall be made on the common portal in FORM GST ARA-01 and shall be accompanied by a fee of five thousand rupees, to be deposited in the manner specified in section 49 (Section 49 deals with procedure of payment of tax/interest/penalty and the mechanism to make payment through Electronic Cash and Credit Ledgers).
The application fee for Advance Ruling is as under:
i) For Central GST Acts (CGST, IGST, CESS): Rs. 5000/- and
ii) Government of Maharashtra GST Act (MGST): Rs.5000/-
i.e. Applicant shall deposit total fee per application an amount of Rs. 10,000/- (Rs. 5000/- + Rs. 5000/-) = Rs. 10,000/- into Government Treasury in the prescribed challan, in prescribed fee column of challan under GST Law 2017. (Click here to view the Challan)
The Application, the verification contained therein and all the relevant documents accompanying such application shall be signed in the manner specified in Rule 26 of the CGST Rules, 2017. Rule 26 provides for the manner of authenticating documents through Digital Signature Certificate (DSC) or e-Signature as specified in the Information Technology Act.
The application, the verification contained therein and all the relevant documents accompanying such application shall be signed-
(a) in the case of an individual, by the individual himself or where he is absent from India, by some other person duly authorized by him in this behalf, and where the individual is mentally incapacitated from attending to his affairs, by his guardian or by any other person competent to act on his behalf;
(b) in the case of a Hindu Undivided Family, by a Karta and where the Karta is absent from India or is mentally incapacitated from attending to his affairs, by any other adult member of such family or by the authorized signatory of such Karta;
(c) in the case of a company, by the Chief Executive Officer or the authorized signatory thereof;
(d) in the case of a Government or any Governmental agency or local authority, by an officer authorized in this behalf;
(e) in the case of a firm, by any partner thereof, not being a minor or the authorized signatory thereof;
(f) in the case of any other association, by any member of the association or persons or the authorized signatory thereof;
(g) in the case of a trust, by the trustee or any trustee or the authorized signatory thereof; or
(h) in the case of any other person, by some person competent to act on his behalf, or by a person authorized in accordance with the provisions of Section 48 of the CGST Act.
As per Rules 104 and 106 of the CGST Rules, 2017 the application for obtaining an Advance Ruling and filing an appeal against an Advance Ruling shall be made by the applicant on the common portal. However, due to the unavailability of the requisite forms on the common portal, a new rule 107A has been inserted vide notification No. 55/2017-Central Tax, dated 15.11.2017, which states that in respect of any process or procedure prescribed in Chapter XII, any reference to electronic filing of an application, intimation, reply, declaration, statement or electronic issuance of a notice, order or certificate on the common portal shall, in respect of that process or procedure, include the manual filing of the said application, intimation, reply, declaration, statement or issuance of the said notice, order or certificate in such Forms as appended to the CGST Rules. (Click here to view above mentioned Notification)
Circular no. 25/25/2017-GST dated 21.12.2017 prescribing the detailed procedure for manual filing of applications for Advance Ruling and appeals before Appellate Authority for Advance Ruling has been issued. (Click here to view the above mentioned Circular)
An application for obtaining an Advance Ruling under sub-section (1) of Section 97 of the CGST Act and the Rules made thereunder, shall be made in quadruplicate, in FORM GST ARA-01 i.e. the set of physical four copies to be submitted to the office of Authority for Advance Ruling of Maharashtra. (First main copy, two copies for Members of Bench and one copy for Officer).
Authority for Advance Ruling of Maharashtra, GST Bhavan Building, 8th floor, H-Wing, Mazgaon, Mumbai-400 010.
The Maharashtra Appellate Authority for Advance Ruling for Goods and Services Tax, 15th Floor, Air India Building, Nariman Point, Mumbai, 400 021.
1. The portal of Authority for Advance Ruling is made available to create challan to make payment and same copy of challan to be submitted along with application in Form GST ARA-01 with four copies of application. The ARA-01 application is verified as per the ARN No. generated on portal. Each application is recorded in the register maintained and allotted the separate ARA Number in chronological order and acknowledgement receipt is given to the applicant for the said application filed in the office of Authority for Advance Ruling.
2. Upon receipt of an application, the Authority for Advance Ruling shall send a copy of application to the Officer in whose jurisdiction the Applicant falls and call for all relevant records. The Authority for Advance Ruling may then examine the application along with the records and may also hear the
After verification of Form ARA-01 application, a notice for acceptance/rejection of application along with additional requirement with annexure under sub-section (2) of Section 98 of CGST/MGST Act, 2017 is issued to the applicant as well as concerned Jurisdictional Officer for information, calling of record and further action to attend for preliminary hearing along with legal
submissions and relevant record if available for the evidential purposes. The reasonable opportunities of being heard i.e. minimum 15 days is granted for the preparation of case, gathering of information and date is fixed to attend the hearing before the Bench for applicant and concern jurisdictional Officer.
At the time of preliminary hearing, the contention and written submission of both parties were heard. After completion of preliminary hearing, the decision of the Authority Members with respect to admission or rejection would be communicated to the applicant by writing a letter or Order in due course of proceeding.
Application for advance ruling shall not be admitted as per section 98(2) in cases where the question raised in the application is already pending or decided in any proceedings in the case of an applicant under any of the provisions of CGST/MGST Act. If the application is rejected, it should be only after an opportunity of being heard is provided to the applicant and by way of a speaking Order giving the reasons for rejection.
A Final Hearing Notice is issued, on the basis of admission of the application and decision taken by the both members, to the applicant and concerned Jurisdictional Officer. The specific date is fixed for final hearing. The sufficient time i.e. reasonable time is granted for final hearing to both the parties to submit their supporting additional contention, written submission, and any evidential proofs to be submitted in connection with relevant questions asked. Thereafter, considering the facts of the case the Authority for Advance Ruling will pass an order on merit on the application filed.
After given reasonable opportunity of being heard to the applicant /officers, the final hearing is completed by the Authority. Considering the facts of the case, submission, evidences, documents produced on the record, unanimous
decision of the members, the order is passed within 90 days from the receipt of application under Section 98 (6) of CGST Act/MGST Act, 2017.
If there is difference of opinion between the two members of AAR, they shall refer the point or points on which they differ to the Appellate Authority for Advance Ruling (AAAR) for hearing the issue. If the members of AAAR are also unable to come to a common conclusion in regard to the point(s) referred to them by AAR, then it shall be deemed that no Advance Ruling can be given in respect of the question on which difference persists at the level of AAAR.
Orders passed by AAR can be viewed at www.mahagst.gov.in (Click here to view the Orders). Orders passed by AAR can also be viewed on the portal of Goods and Services Tax Council www.gstcouncil.gov.in/advance-rulings.
MIS Report of the Orders passed by various AAR is available on the portal of Goods and Services Tax Council www.gstcouncil.gov.in/advance-rulings.
A copy of every Advance Ruling pronounced by the Authority, duly signed by the members of Authority for Advance Ruling and certified in such manner as may be prescribed, shall be sent to the applicant, the concerned officer and the jurisdictional officer after such pronouncement for the further appropriate action.
If the applicant is aggrieved with the findings of the AAR, he can file an appeal with Appellate Authority for Advance Ruling (AAAR). The Government of Maharashtra has constituted an Authority known as “The Maharashtra Appellate Authority for Advance Ruling for Goods and Services Tax” vide Notification No. MGST-1018/C.R.38/Taxation-1. (Marathi/English) Details of AAAR is also available on the portal of GST Council www.gstcouncil.gov.in/advance-rulings. Such an appeal shall be filed within a period of thirty days from the date on which the ruling sought to be appealed against, is communicated to the applicant, jurisdictional officer and concerned officer. The form and manner of filing appeal with AAAR is given in Rule 106 of the CGST Rules, 2017. An appeal against the Advance Ruling shall be made by an applicant in FORM GST ARA-02 and shall be accompanied by a fee of ten thousand rupees (Rs. 10,000/-) to be deposited in the manner specified in Section 49.
Similarly, if the prescribed or jurisdictional officer of CGST/SGST Act, does not agree with the finding of AAR, he can also file an appeal with AAAR. The word ‘prescribed officer’ of CGST/SGST means an officer who has been designated by the CGST/SGST administration in regard to an application for Advance Ruling. In normal circumstances, the concerned officer will be the officer in whose jurisdiction the applicant is located. An appeal against the Advance Ruling shall be made by the concerned officer or the jurisdictional officer referred to in Section in FORM GST ARA-03 and no fee shall be payable by the said officer for filing the appeal.
The appeal (by the applicant or jurisdictional officer), the verification contained therein and all the relevant documents accompanying such appeal shall be signed, –
(a) in the case of the concerned officer or jurisdictional officer, by an officer authorized in writing by such officer; and
(b) in the case of an applicant, in the manner specified in Rule 26 (DSC / e-Signature). Any appeal must be filed within thirty days from the date on which the Advance Ruling is communicated to the concerned officer, the jurisdictional officer and applicant.
The Appellate Authority must pass an order after hearing the parties to the appeal within a period of ninety days of the filing of an appeal. If members of AAAR differ on any point referred to in appeal, it shall be deemed that no Advance Ruling is issued in respect of the question under appeal. The Orders passed by AAAR are available on the portal of GST Council www.gstcouncil.gov.in/advance-rulings.
The MIS reports of the orders passed by various AAAR is available on the portal of GST Council www.gstcouncil.gov.in/advance-rulings.
The law gives power to Advance Ruling Authority and AAAR to amend their order to rectify any mistake apparent from the record within a period of six months from the date of the order. Such mistake may be noticed by the authority on its own accord or may be brought to its notice by the applicant or the prescribed or the jurisdictional CGST/SGST officer. If a rectification has the effect of enhancing the tax liability or reducing the quantum of input tax credit, the applicant must be heard before the order is passed.
Both the Advance Ruling Authority and AAAR are vested with the powers of a Civil Court under Code of Civil Procedure, 1908, for discovery and inspection, enforcing the attendance of a person and examining him on oath, and compelling production of books of account and other records. Both the authorities are deemed to be a Civil Court for the purposes of section 195 of the Code of Criminal Procedure, 1973. Any proceeding before the authority shall be deemed to be judicial proceeding under Section 193 and 228 and for the purpose of Section 196, of the Indian Penal Code, 1860. The Advance Ruling Authority and AAAR also have the power to regulate their own procedure.
To conclude, it can be stated that the law makes a comprehensive provision for Advance Rulings to ensure that disputes are minimal. Timelines are also given within which the ruling is to be given by the concerned authority. The aim is to provide certainty to the taxpayer with respect to his obligations under the GST Act and an expeditious ruling, so that the relationship between the taxpayer and administration is smooth and transparent and helps to avoid unnecessary litigation.
(Republished with Amendments)