Q 1. What is the meaning of Advance Ruling?
Ans. As per section 94 of Model CGST/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 (section 99).
Q 2. Which are the matters enumerated in Section 97 for
which advance ruling can be sought?
Ans. Advance Ruling can be sought for the following matters:
(a) classification of any goods or services under the Act;
(b) applicability of a notification issued under provisions
of the Act having a bearing on the rate of tax;
(c) the principles to be adopted for the purposes of determination
of value of the goods or services under the provisions of the Act;
(d) admissibility of input tax credit of tax paid or deemed
to have been paid;
(e) determination of the liability to pay tax on any goods
or services under the Act;
(f) whether applicant is required to be registered under the
Act;
(g) whether any particular thing done by the applicant with
respect to any goods or services 166 amounts to or results in a supply of goods
or services, within the meaning of that term.
Q 3. What is the objective of having a mechanism of Advance
Ruling?
Ans. The broad objective for setting up such an authority is
to:
i. provide certainty in tax liability in advance in relation
to an activity proposed to be undertaken by the applicant;
ii. attract Foreign Direct Investment (FDI);
iii. reduce litigation;
iv. pronounce ruling expeditiously in transparent and
inexpensive manner.
Q 4. What will be the composition of Authority for advance
rulings (AAR) under GST?
Ans. ‘Authority for advance ruling’ (AAR) shall comprise one
member CGST and one member SGST. They 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. (Section 95).
Q 5. What is the Appellate authority for advance ruling
(AAAR) and what would be its composition?
Ans. Appellate authority for advance ruling (AAAR) will hear
appeal against advance ruling given by the 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. (Section 96).
Q 6. How may AAR and AAAR will be constituted under GST?
Ans. There will be one AAR and AAAR for each State (sections
95 and 96).
Q 7. To whom will the Advance Ruling be applicable?
Ans. Section 102 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 taxable persons in theState. It is only limited
to the person who has applied for an advance ruling.
Q 8. What is the time period for applicability of Advance
Ruling?
Ans. 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.
Q 9. Can an advance ruling given be nullified?
Ans. Section 103 provides that an advance ruling shall be
held to be ab initio void if the AAR or AAAR finds that the 168 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
CGST/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 issued). An order declaring
advance ruling to be void can be passed only after hearing the applicant.
Q 10. What is the procedure for obtaining Advance Ruling?
Ans. 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. 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.
Q 11. Under what circumstances will the application for
Advance Ruling be compulsorily rejected?
Ans. Application has to be invariably rejected in certain situations
as prescribed under section 98 (2) which are enumerated as below:
(a) 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;
(b) 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;
(c) 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;
(d) 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 rejection.
Q 12. What is the procedure to be followed by AAR once the
application is admitted?
Ans. 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 authorized representative as well as
the jurisdictional officers of CGST/SGST.
Q 13. What happens if there is a difference of opinion amongst
members of AAR?
Ans. 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.
Q 14. What are the provisions for appeals against order of
AAR?
Ans. The provisions of appeal before AAAR are dealt in section
99 and 100 of Model GST Law. If the applicant is aggrieved with the finding of
the AAR, he can file an appeal with AAAR. Similarly, if the prescribed or
jurisdictional officer of CGST/SGST does not agree with the finding of AAR, he
can also file an appeal with AAAR. The word prescribed officer of CGST/SGST
means an officer who has been designated by the CGST/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/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.
Q 15. Can the AAR & AAAR order for rectification of mistakes
in the ruling?
Ans. Yes. 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/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 is passed.