As per section 94 of Model CGST and SGST Law, ‘advance ruling’ means a written decision provided by the authority to an applicant on matters or on questions as enumerated in section 97 and appeals thereon under section 99.
Advance Ruling can be sought for the following matters:
1. Classification of any goods and or services under the Act.
2. Applicability of a notification issued under provisions of the Act having a bearing on the rate of tax;
3. The principles to be adopted for the purposes of determination of value of the goods or services under the provisions of the Act;
4. Admissibility of input tax credit of tax paid or deemed to have been paid.
5. Determination of the liability to pay tax on any goods and or services under the Act.
6. Whether applicant is required to be registered under the Act;
7. Whether any particular thing done by the applicant with respect to any goods and or services amounts to, or results in a supply of goods or services, within the meaning of that term.
The broad objective for setting up such an authority is to:
1. To provide certainty in tax liability in advance in relation to an activity proposed to be undertaken by the applicant;
2. Attract Foreign Direct Investment (FDI)
3. Reduce or avoid litigation
4. Pronounce ruling expeditiously in transparent and inexpensive manner.
‘Authority for advance ruling; (AAR) shall comprise one member CGST and one member SGST. The will be appointed by the Central and State Government respectively. Their qualification and eligibility condition for appointment will be prescribed in the Model GST Rules under Section 95.
Appellate authority for advance ruling (AAAR) will hear appeal against advance ruling given by the Authority for advance ruling (AAR). This will comprise of two members namely Chief Commissioner of CGST designated by the Central Board Excise and customs (CBEC) and Commissioner of SGST having jurisdiction over the applicant under section 96 of Model GST Law.
Under Section 95 and 96 of Model GST Law, there will be one AAR and AAAR for each State.
As per section 102 of Model GST Law it provides that an advance ruling pronounced by AAR or AAAR shall be binding only on the applicant and on the jurisdictional tax authority of the applicant. This clearly means that an advance ruling is not applicable to similarly placed tax able persons in the State. 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, in Section 102 it is provided that advance ruling shall be binding till the period when the law, facts or circumstances supporting the original advance ruling have changed.
An advance ruling shall be held to be ab initio void if the AAR 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 CST and or SGST 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 issue. An order declaring advance ruling to be void can be passed only after hearing the applicant as per Section 103 of Model GST Law.
According to Section 97 and 98 deals with procedure for obtaining advance ruling. Section 97 provides that the applicant desirous of obtaining advance ruling should make application to AAR in a prescribed form and manner. The format of the form and the detailed procedure for making application will be prescribed in the Model GST Rules.
Likewise Section 98 provides the procedure for dealing with the application for advance ruling. The AAR shall send a copy of application to the officer in whose jurisdiction the applicant falls and call for all relevant records. The AAR may then examine the application along with the records and may also hear the applicant. Thereafter he will pass an order either admitting or rejecting the application.
Application has to be invariably rejected in certain situations as prescribed under sub section (2) of Section 98 which are enumerated as under:-
1. If the question raised in the application is already pending in the applicant’s case before any First Appellate Authority, the Appellate Tribunal or Any Court;
2. If the question raised in the application is the same as in a matter already decided by the First Appellate Authority, the Appellate Tribunal or any Court.
3. If the question raised in the application is the same as in a matter already pending in any proceedings in the applicant’s case under any of the provisions of the Act.
4. If the question raised in the application is the same as in a matter in the applicant’s case already decided by the adjudicating authority or assessing authority, whichever is applicable.
If the application is rejected, it should be by way of a speaking order giving the reasons for such rejection.
If the application is admitted, the AAR shall pronounce its ruling within ninety days of receipt of application. Before giving its ruling, it shall examine the application and any further material furnished by the applicant or by the concerned departmental officer.
Before giving the ruling, AAR must hear the applicant or his authorised representative as well as the jurisdictional officers of CGST and SGST.
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 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.
The provision of appeal before AAAR is dealt in section 99 and 100 of Model GST Law.
If the applicants is aggrieved with the finding of the AAR, he can file an appeal with AAAR. Similarly, if the prescribed or jurisdictional officer of CGST or SGST does not agree with the finding of AAR, he can also file an appeal with AAAR. The word prescribed officer of CGST and or SGST means an officer who has been designated by the CGST and or 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. In such cases the concerned officer will be the jurisdictional CGST and or SGST officer.
Any appeal must be filed within thirty days from the receipt of the advance ruling. The appeal has to be in prescribed form and has to be verified in prescribed manner. This will be prescribed in the Model GST Rules.
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.
According to Section 101 of the Act gives power to AAR 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 and or 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 passed.
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