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Advance Ruling under Goods & Services Tax (GST)

Advance ruling means a decision provided by the constituted authority at the request of applicant on matters relating GST provisions. Unlike old Indirect Tax laws, it can be obtained by taxpayer on a proposed transaction as well as a transaction already undertaken.

“Advance ruling” means a decision provided by the constituted authority at the request of applicant on matters relating GST provisions. Unlike old Indirect Tax laws, it can be obtained by taxpayer on a proposed transaction as well as a transaction already undertaken.

As per section 97(2) of CGST Act 2017, advance ruling under GST can be obtained by taxpayer to clarify matter relating to:

(a) classification of any goods or services or both;

(b) applicability of a notification issued under the provisions of this 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.

Process of Advance Ruling under GST:

  • An application under Section 97(1) of CGST Act, 2017 shall be made to “Appellate Authority” in FORM GST ARA-01 (as per rule 104 of CGST Rule) and shall be accompanied by a fee of five thousand rupees, the facility is also being enable on common portal to pay the said amount and create application.
  • On receipt of application and call of relevant record, authority may examine such application and record, and by order, accept or reject the application.
  • Application shall be rejected when question raised in the application is already pending or decided in any proceedings.
  • AAR shall grant an opportunity of hearing to the applicant as before passing order of any rejection and in case, if application is rejected, reason for such rejection shall be specified in the order.
  • If the application is admitted, AAR has the obligation to pronounce its ruling within 90 days of receipt of application, and in case any difference of opinion between the two members of AAR on a same question, they shall refer the point or points on which they differ to the Appellate Authority of 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.

Appeal to the Appellate Authority against Advance Ruling under GST :

  • As per Section 100(1), Applicant or the concerned officer may appeal to authority against order passed under Section 97(1), if they are aggrieved with the finding of the AAR, within thirty days from the date on which the pronounced ruling is communicated to the concerned officer, the jurisdictional officer and the applicant.
  • Appeal shall be made by applicant on the common portal in FORM GST ARA-02 as given in CGST rule 106(1) with a fee of ten thousand rupees.
  • Similarly, if the prescribed or jurisdictional officer of CGST/SGST does not agree, he can also file an appeal with AAAR in FORM GST ARA-03 as given in CGST rule 106(1) and no fee shall be payable by them.
  • AAR shall pass order as it thinks fit, confirming or modifying the ruling appealed. Further, such order shall be passed within ninety days under section 90 and a copy of the advance ruling pronounced by the Appellate Authority and duly signed by the Members shall be sent to applicant and concerned officer as per Rule 107 of CGST rule, 2017.
  • 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 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.

Rectification by Appellate Authority of Advance Ruling under GST:

AAR and AAAR has the power to amend their order to rectify any mistake apparent from the record within a period of six months from the date of the order under section 98 or 101 of CGST Act 2017. 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. However, 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.

Further, if it has been found that advance ruling pronounced by it under section 98(4) or section 101(1) has been obtained by the applicant by fraud or suppression of material facts or misrepresentation of facts, AAR or AAAR may, by order, declare such ruling to be void, as if such advance ruling had never been made.

Conclusion

To conclude it, advance ruling provision under GST has been taken by law to benefit taxpayer by avoiding costly and unnecessary litigation and minimise disputes. The main aim is to make relationship between taxpayer and GST authority transparent and smoothen.

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