Advance Ruling (AR) in GST or Concept of Advance (AR) Ruling Under GST or Advance Ruling Provisions in GST

In this article we will discuss in detail about transactions for which “Advance ruling” can be claimed, fees to be paid with application of advance ruling, time limit to announced Advance ruling by AAR and Appeal against Advance Ruling.

Section 95(a) of CGST Act defined Advance Ruling as: a decision provided by the Authority or the Appellate Authority to an applicant (It can be un-registered Person) on matters or on questions specified in sub-section (2) of section 97 or sub-section (1) of section 100, in relation to the supply of goods or services or both being “undertaken” or “proposed” to be undertaken by the applicant.

Means if a person is unable to interpret the law then he/she can apply for advance ruling either before initiating the transaction or for a transaction that already being undertaken.

Section 97(2) of CGST Act defined transactions/questions which are eligible for Advance Ruling:

• Classification of any goods or services or both; i.e. to know whether any particular transaction is supply of goods or supply of service
• Applicability of a notification issued under the provisions of this Act; i.e. to check whether any notification is applicable to applicant or to any transaction of applicant
• Determination of time and value of supply of goods or services or both; i.e. to determine exact transaction value of an outward/inward supply
• Admissibility of input tax credit of tax paid or deemed to have been paid; i.e. to check whether input credit of any transaction will be available to applicant
• Determination of the liability to pay tax on any goods or services or both; i.e. to conclude final tax liability of applicant from a transaction
• Whether applicant is require to be registered; i.e. to check the applicability of provisions of GST law pertains to registration under GST
• 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; i.e. to analyze the transaction to conclude whether such transaction is supply as defined under GST law

So if a person undertaken or proposed to be undertaken any transactions as mentioned above, can apply for Advance Ruling to the “Authority” (AAR) constituted under section 96 of CGST Act. Application to the Authority shall be file in Form GST ARA-01onn GSTN along with fee of INR 5,000.

Procedural part for filling an Application for Advance Ruling:

• On receipt of an application by the authority, the authority shall forward a copy of application to the concerned officer (Generally Assessing officer of applicant) and, if necessary, call upon him to furnish the relevant records.
• Where any records have been called for, in any case, the authority shall as soon as possible, return such records to the said concerned officer.
• The Authority may, after examining the application and the records called for and after hearing the applicant or his authorized representative and the concerned officer or his authorized representative, by order, either admit or reject the application, which means that authority has power to reject the application of applicant where the question raised in the application is already pending or decided in any proceedings in the case of an applicant of same state (any person whether tax payer or not of same state) under any of the provisions of this Act, further no application shall be rejected unless an opportunity of hearing has been given to the applicant.
• After rejection of an application, authority shall pass an order of rejection and in such order reason for rejection shall be recorded.
• Where an application is admitted, the Authority shall, after examining such further material as may be placed before it by the applicant or obtained by the authority of advance ruling (AAR) and after providing an opportunity of being heard to the applicant or his authorized representative as well as to the concerned officer or his authorized representative, pronounce its advance ruling on the question specified in the application.
• The Authority shall pronounce its advance ruling in writing within 90 days from the date of receipt of application.
• A copy of the advance ruling pronounced by the authority shall be duly signed and certified by the members of authority & shall be sent to the applicant, the concerned officer and the jurisdictional officer after such pronouncement.
• If there is a difference of opinion between the members of authority, 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 appellate authority are also unable to come to a common conclusion in regard to the point(s) referred by authority, then it shall be deemed that no advance ruling can be given in respect of the question on which difference persists.

Appeal against Advance Ruling to Appellate Authority:

• The Assessing officer or an applicant may appeal to the Appellate Authority for advance ruling (AAAR), if they are aggrieved by pronouncement of advance ruling.
• Application shall be file by an applicant in Form GST ARA-02 along with fee on INR 10,000. If appeal has to be file by Assessing officer then application will be file in Form GST ARA-03 but such Assessing officer doesn’t require paying any fees.
• An appeal shall be filed within a period of 30 days from the communication date of pronouncement of order. In some cases AA may allow an application beyond 30 days but such extended period can’t extend by further 30 days. So total time will be maximum 60 days.
• The Appellate Authority may, after giving the parties to the appeal an opportunity of being heard, pass such order as it thinks fit, either confirming or modifying the ruling appealed against or referred to.
• AAAR shall pass their order within a period of 90 days from the date of filing of the appeal.
• A copy of the advance ruling pronounced by the AAAR duly signed & certified by the members of AAAR and shall be sent to the applicant, the concerned officer, the jurisdictional officer and to the authority after such pronouncement.

Rectification of order:

The Authority or the Appellate Authority may amend any order passed by it, so as to rectify any error apparent on the face of the record, if such error is noticed by the Authority or the Appellate Authority on its own accord, or is brought to its notice by the concerned officer, the jurisdictional officer, the applicant or the appellant within a period of six months from the date of the order. Further no rectification, which has the effect of enhancing the tax liability or reducing the amount of admissible input tax credit, shall be made unless the applicant or the appellant has been given an opportunity of being heard

Binding Order:

The advance ruling pronounced by the Authority or the Appellate Authority shall be binding only on applicant and on the concerned officer or the jurisdictional officer in respect of the application. Hence no one else is bind to follow such order. Further such pronounced advance ruling shall be valid till the time/period when the law, facts or circumstances supporting the original advance ruling have not changed. (Concept of ISD under GST http://shorturl.at/ovDKX )

Withdrawal of Order and Penal Provisions:

If authority (AAR) or the AAAR finds that advance ruling pronounced by it has been obtained by the applicant or the appellant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void ab-initio and thereupon all the provisions of this Act or the rules made there under shall apply to the applicant or the appellant as if such advance ruling had never been made.

Conclusion:

Advance Ruling is an option available the person who is seeking for clarification of certain tax matters and such ruling is a written decision given by the tax authorities to an applicant on questions relating to the particular transaction and applicant & assessing officer will be bind with such order unless an appeal filed against it or any amendment to relevant law.