GST Advance Ruling

The fundamental goal of an Advance Ruling is to offer certainty in tax liability in advance for an activity requested by the applicant. Other goals that can be reached using Advance Ruling include:

• Reduce disputes
• Attracting more Foreign Direct Investment (FDI)
• Pronounce rulings in a timely, transparent, and cost-effective manner

Advance Ruling Authority – Structure, Hierarchy, Rules & Acts

Authority for advance ruling (AAR) and Appellate authority for advance ruling (AAAR)

The Authority for Advance Ruling & the Appellate Authority for Advance Ruling are established under the provisions of the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act. They shall also be regarded to be the established authorities for Advance Ruling under the CGST Act, 2017.

Since the bodies are established under the respective State/Union Territory Act, their rulings shall not be binding in other states and union territories.

To Whom The Advance Ruling Is Applicable

An advance ruling issued by AAR or AAAR is solely binding on the applicant and the involved officer or the jurisdictional officer in the applicant's case. This plainly indicates that an advance judgement does not apply to similarly situated other taxable people in the State. It is only available to the individual who has requested an advance ruling.

Is There A Time Period For The Applicability Of The Advance Ruling?

The law makes no mention of a time limit during which the ruling will be in effect. Instead, it has been said that the advance ruling will be binding until the law, facts, or circumstances supporting the initial advance ruling do not change.

Nevertheless, if the AAR or AAAR determines that the applicant obtained the advance ruling through deception, concealment of material information, or misrepresentation of facts, the advance ruling will be declared ab initio void.

What Are The Matters & Questions Allowed For Advance Ruling?

The current law has brought in some improvements to the Advance Ruling provisions under the previous Customs and Central Excise Laws. As per the current rules, advance rulings can be obtained on both a proposed transaction and a transaction already done by the appellant.

Furthermore, Section 100(1) of the CGST Act, 2017 states that any officer, jurisdictional officer, or applicant who is dissatisfied with an advance decision issued by the Authority for Advance Ruling may appeal to the Appellate Authority. This allows an Appellate authority decision to be viewed as an advance ruling.

Matters or questions specified in Section 97(2) & Section 100(1) of the CGST Act, 2017 –

(a) Classification of any goods or services or both

(b) Applicability of a notification made under the provisions of the CGST Act

(c) Time and value of supply of goods or services or both

(d) Acceptance of input tax credit for tax paid or deemed to have been paid

(e) Determination of the need to pay tax on any products or services or both

(f) Whether the application is needed to be registered

(g) Whether any specific action taken by the applicant in relation to any products or services or both amounts to or results in a supply of goods or services or both, within the meaning of that word.

What Is The Process Of Obtaining An Advance Ruling?

1. If an applicant wishes to get an advance ruling, he or she must submit an application to AAR in the prescribed form and manner.

2. The Advance Ruling regulations state the structure of the form as well as the entire method for submitting the application form.

3. Upon receipt of an application, the AAR shall forward a copy to the officer whose authority the petitioner falls under and requests all necessary records.

4. The AAR may then review the application and the records, as well as hear the applicant. Following that, he will issue an order either admitting or denying the application.

5. If the application is accepted, the AAR must issue a decision within ninety days of receiving it.

6. Before issuing a judgement, AAR must hear the applicant or his authorized agent, as well as the CGST/SGST jurisdictional officers.

7. If the application is denied, the grounds for the denial should be stated in a spoken sequence.

8. In circumstances where the question presented in the application is already pending or decided in any proceedings in the case of an applicant under any of the provisions of this Act, an application for early ruling shall not be accepted.

Can I Appeal An Advance Ruling Order Of Authority For Advance Ruling (AAR)

1. If the applicant is dissatisfied with the AAR's decision, he may seek an appeal with AAAR.

2. Similarly, if the prescribed or jurisdictional officer of CGST/SGST disagrees with the AAR's findings, he may submit an appeal with AAAR.

3. Any appeal must be submitted within thirty days after the advance ruling's receipt.

4. The appeal must be filed in the prescribed format and validated in the prescribed way.

5. Within ninety days after the filing of an appeal, the AAAE must issue an order after hearing the parties.

6. If members of the AAAR disagree on any point raised in the appeal, it is presumed that no advance ruling is provided on the issue under appeal.

Rectification Of Mistakes In Advance Ruling

• The legislation allows AAR and AAAR to alter their order within six months of the date of the order to correct any mistake obvious from the record.
• Such an error may be discovered by the authority on its own or brought to its attention by the applicant, the prescribed or the jurisdictional CGST/SGST officer.
• If a correction increases the tax burden or reduces the amount of input tax credit, the applicant must be heard before the order is issued.

FAQs