Budget 2017-Amendments to the structure of Authority for Advance Rulings

Chapter XIX-B of the Act relates to the Advance rulings under the Act.

With a view to promote ease of doing business, it has been decided by the Government to merge the Authority for Advance Ruling (AAR) for income-tax, central excise, customs duty and service tax. Accordingly, necessary amendments, have been made to Chapter XIX-B to allow merger of these AARs.

Accordingly, it is proposed to amend the definition of applicant in section 245N of the Act to provide reference of applications for Advance Ruling made under the Customs Act, 1962, the Central Excise Act, 1944 and the Finance Act, 1994 (which makes provisions in respect of Service Tax Matters). Similarly, amendment has been proposed to section 245Q which relates to application for advance ruling.

It is further proposed to amend the qualifications for appointment as revenue Member of the AAR and provide that an officer of the Indian Revenue Service qualified to be a Member of the Central Board of Direct Taxes Board and an officer of the Indian Customs and Central Excise Service, who is qualified to be a member of the Central Board of Excise & Customs, shall be eligible to be appointed as revenue Member of AAR.

In order to improve the efficiency and efficacy of the AAR, and to increase the available pool for appointment as Chairman, AAR, it is proposed to amend the qualifications for appointment as Chairman as provided in section 245-O and provide that a former Chief Justice of a High Court, or a person who has been a High Court Judge for at least seven years shall also be eligible to be Chairman of the AAR.

It is also proposed to provide that the qualifications for appointment as revenue Member or law Member shall be considered as on the date of occurrence of the vacancy.

It is also proposed that in the event the Chairman is unable to discharge his functions owing to absence, illness or any other reason, or in the event that the office of the Chairman falls vacant, the Vice-chairman shall discharge the functions of the Chairman until the new Chairman enters upon his office or until the incumbent Chairman resumes his duties.

These amendments will take effect from 1st April, 2017.

[Clauses 79, 80 & 81]

Extract of relevant clause from Finance Bill, 2017

Amendment of section 245N.

79. In section 245N of the Income-tax Act, for clause (b), the following clause shall be substituted, namely:—

‘(b) “applicant” means—

(A) any person who—

(I) is a non-resident referred to in sub-clause (i) of clause (a); or

(II) is a resident referred to in sub-clause (ii) of clause (a); or

(III) is a resident referred to in sub-clause (iia) of clause (a) falling within any such class or category of persons as the Central Government may, by notification in the Official Gazette, specify; or

(IV) is a resident falling within any such class or category of persons as the Central Government may, by notification in the Official Gazette, specify in this behalf; or

(V) is referred to in sub-clause (iv) of clause (a),

and makes an application under sub-section (1) of section 245Q;

(B) an applicant as defined in clause (c) of section 28E of the Customs Act, 1962;

(C) an applicant as defined in clause (c) of section 23A of the Central Excise Act, 1944;

(D) an applicant as defined in clause (b) of section 96A of the Finance Act, 1994;’.

Amendment of section 245-O.

80. In section 245-O of the Income-tax Act,—

‘(a) in sub-section (3),—

(i) in clause (a), after the words “a Judge of the Supreme Court”, the words “or the Chief Justice of a High Court or for at least seven years a Judge of a High Court” shall be inserted;

(ii) for clause (c), the following clause shall be substituted, namely:—

“(c) a revenue Member—

(i) from the Indian Revenue Service, who is, or is qualified to be, a Member of the Board; or

(ii) from the Indian Customs and Central Excise Service, who is, or is qualified to be, a Member of the Central Board of Excise and Customs,

on the date of occurrence of vacancy;”;

(iii) in clause (d), after the words “Government of India”, the words “on the date of occurrence of vacancy” shall be inserted;

(b) after sub-section (6), the following sub-sections shall be inserted, namely:—

“(6A) In the event of the occurrence of any vacancy in the office of the Chairman by reason of his death, resignation or otherwise, the senior-most Vice-chairman shall act as the Chairman until the date on which a new Chairman, appointed in accordance with the provisions of this Act to fill such vacancy, enters upon his office.

(6B) In case the Chairman is unable to discharge his functions owing to absence, illness or any other cause, the senior-most Vice-chairman shall discharge the functions of the Chairman until the date on which the Chairman resumes his duties.”.

Amendment of section 245Q.

81. In section 245Q of the Income-tax Act, in sub-section (1), after the words “advance ruling under this Chapter”, the words, figures and letters “or under Chapter V of the Customs Act, 1962 or under Chapter IIIA of the Central Excise Act, 1944 or under Chapter VA of the Finance Act, 1994” shall be

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