Advance Ruling under GST – �Do’s and Don’ts

CA. VIRAL M KHANDHAR

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Feminar by NIRC OF ICAI

12^th October 2023

History

• 1993 –Authority for Advance Ruling(AAR) established under the Income Tax as a quasi-judicial authority to resolve potential disputes of non-resident investors to build certainty and trust
• 1999 –Similar AAR was established for Customs and Excise matters
• 2003 –Similar AAR was established for Service tax matters
• 2017 –AAR established for GST matters
• 2019 – National Appellate Authority for Advance Ruling under GST constituted in law but yet to be established
• 2022 - The validity of rulings under Customs AAR limited to three years

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SIGNIFICANCE OF ADVANCE RULING

• Helps the applicant in planning his activities which are liable for payment of GST, well in advance
• Determining the tax liability well in advance
• Avoiding long drawn and expensive litigation at a later date
• Certainty and transparency to a taxpayer with respect to an issue which may potentially cause a dispute with the tax administration

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Advance Ruling application filed but REJECTED??

Chapter XVII - Advance Rulings

DEFINITIONS – SECTION 95

• Advance Ruling - means a decision provided by the Authority or the Appellate Authority or the National Appellate Authority to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub-section (1) of section 100 or of 101C, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.
• Authority - as referred to in Section 96 – not below the rank of Joint. Commissioner, consists of officers of Central Tax and State Tax – located in each state
• Appellate Authority – as referred to in Section 99 -Chief Commissioner of Central Tax and Commissioner of State Tax
• National Appellate Authority – means National Appellate Authority for Advance Ruling referred to in Section 101A -
• Applicant - means any person registered or desirous of obtaining registration under this Act

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QUESTIONS ON WHICH ADVANCE RULING CAN BE SOUGHT – SECTION 97(2)

1. Classification of any goods or services or both;
2. Applicability of a notification issued under the provisions of this Act;
3. Determination of time and value of supply of goods or services or both;
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 or services or both;
6. Whether applicant is required to be registered;
7. 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.

PROCEDURE OF FILING AN ADVANCE RULING IN GST– SECTION 97,98 read with Rule 104,105

1. An application in FORM GST ARA -01 to be made on the GST Portal with fees of Rs. 5,000/- CGST and 5,000/- SGST and digitally signed.
2. Copy of such application shall be forwarded to the concerned officer and request furnishing of relevant records.
3. After examining of the applications and records and personal hearing, either admit or reject the application [Section 98(2)]
• Application cannot be admitted where the question raised 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
• No rejection without opportunity of being heard and mentioning reason for rejection.
4. Copy of every order to be sent to the applicant and the concerned officer

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5. After providing an opportunity of being heard and examination of further submissions made by the applicant or the concerned officer, the authority shall pronounce its advance ruling on the question specified in the application [Section 98(4)]
6. Where the members of the Authority differ on any question on which the advance ruling is sought, the case can be referred to the Appellate Authority for hearing and decision on such question.
7. The ruling to be given within 90 days from date of receipt of application.
8. Copy of advance ruling duly signed by the members and certified to be shall be sent to the applicant, the concerned officer and the jurisdictional officer after such pronouncement.

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APPEAL TO APPELLATE AUTHORITY – SECTION 100 read with Rule 106

• Appeal against order pronounced under 98(4) can be filed by
• Applicant
• Concerned officer
• Jurisdictional officer
• Appeal to be filed within 30 days from the date of communication of the order of the Authority. Can be extended by a further period of 30 days if prevented by sufficient cause from presenting the appeal
• Appeal to be filed by applicant in FORM GST ARA -02 accompanied by fees of Rs. 10,000 CGST + Rs. 10,000/- SGST
• Appeal to be filed by officer in FORM GST ARA - 03 and no fee payable.

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PROCEDURE OF APPEAL TO APPELLATE AUTHORITY – SECTION 101 read with Rule 107

1. The Appellate Authority may, after giving the parties to the appeal or reference an opportunity of being heard, pass such order as it thinks fit, confirming or modifying the ruling appealed against or referred to.
2. Order to be passed within 90 days from the date of filing of the appeal or reference made by Authority in case of difference of opinion.
3. Where the members of the Appellate Authority differ on any points referred to in appeal or reference, it shall be deemed that no AAR can be given.
4. Copy of advance ruling shall be sent to applicant, the concerned officer and the jurisdictional officer and to the Authority

CONSTITUTION OF NATIONAL APPELLATE AUTHORITY FOR ADVANCE RULING – SECTION 101A

APPEAL TO NAAAR – SECTION 101B

1. Appeal can be filed against –
• conflicting advance rulings that are given by the Appellate Authorities of two or more States or Union territories or both under sub-section (1) or sub-section (3) of section 101 (AAAR orders which confirm, modify the AAR orders or where are orders are not pronounced due to difference of opinion between the AAAR) to distinct persons
2. Appeal can be filed by any officer authorised by the Commissioner from the States in which the advance rulings have been given or applicant being distinct person as per Section 25
3. Appeal to be filed within
• 30 days from the date of last conflicting ruling is communicated – For applicant
• 90 days from the date of last conflicting ruling is communicated – For officer authorised by the Commissioner
• Additional period of 30 days can be given by the NAAAR in both cases if there is sufficient cause of delay

ORDERS OF NAAAR – SECTION 101C

1. The order will be passed after giving an opportunity of being heard to the appellant, the officer authorized by the Commissioner, all Principal Chief Commissioners, Chief Commissioners of Central tax and Chief Commissioner and Commissioner of State tax of all States and Chief Commissioner and Commissioner of Union territory tax of all Union territories, either confirming or modifying the ruling appealed against.
2. If the members of the National Appellate Authority differ in opinion on any point, it shall be decided according to the opinion of the majority within a period of 90 days .
3. The order referred to in sub-section (1) shall be passed as far as possible within a period of ninety days from the date of filing of the appeal under section 101B.

RECTIFICATION OF ADVANCE RULING – SECTION 102

• The AAR or AAAR or the NAAAR may amend any order passed by it so as to rectify any error apparent on the face of the record
• Error can be brought to the notice by the applicant, concerned officer, jurisdictional officer, the appellant, the AAR or the AAAR
• Error to be rectified within a period of six months from the date of the order
• No rectification that enhances the tax liability or reduces the amount of admissible input tax credit shall be made unless the applicant or the appellant has been given an opportunity to be heard.

APPLICABILITY OF ADVANCE RULING – SECTION 103

• Advance ruling is binding on the applicant who had sought the advance ruling and the concerned officer or the jurisdictional officer in respect of the applicant.
• Advance ruling pronounced by the NAAR shall be binding on the applicant who had sough the ruling and all registered persons under the same PAN and their respective concerned officers and jurisdictional officers
• Ruling shall be binding unless the law, facts or circumstances supporting the original advance ruling have changed.
• Advance Ruling shall be void if the ruling has been obtained by the applicant or the appellant by fraud or suppression of material facts or misrepresentation of facts [Section 104]. However, an opportunity of being heard to be given.

POWERS OF AUTHORITY AND APPELLATE AUTHORITY and NAAAR – SECTION 105

Filling form ARA-01

THANK YOU �

CA. VIRAL M KHANDHAR

�+988 411 5250 �VIRAL@SSACA.IN