67661bos54334 cp23
67661bos54334 cp23
67661bos54334 cp23
ADVANCE RULING
For the sake of brevity, the terms “Authority for Advanced Ruling”, “Appellate
Authority for Advance Ruling”, have been referred to as AAR and AAAR
respectively in this Chapter. The section numbers referred to in the chapter
pertain to CGST Act, unless otherwise specified.
LEARNING OUTCOMES
1. INTRODUCTION
An advance ruling helps the applicant in planning his activities which are liable
for payment of GST, well in advance. It also brings certainty in determining the
tax liability, as the ruling given by the Authority for Advance Ruling is binding
on the applicant as well as concerned Government authorities. Further, it helps
in avoiding long drawn and expensive litigation at a later date. Seeking an
advance ruling is inexpensive and the procedure is simple and expeditious.
It thus provides certainty and transparency to a taxpayer with respect to an issue
which may potentially cause a dispute with the tax administration. A legally
constituted body called Authority for Advance Ruling (AAR) can give a binding
ruling to an applicant who is a registered taxable person or is desirous to be
registered. The advance ruling given by the Authority can be appealed before
an Appellate authority for Advance Ruling (AAAR). There are time lines
prescribed for passing an order by AAR and by AAAR.
The broad objectives for setting up a mechanism of Advance Ruling are:
provide certainty in tax liability in advance in relation to an activity
proposed to be undertaken by the applicant;
attract Foreign Direct Investment (FDI) by ensuring certainty in taxation
aspects of transactions
reduce litigation
pronounce ruling expeditiously in a transparent and inexpensive manner
Chapter XVII – Advance Ruling [Sections 95 to 106] of the CGST Act and
Chapter XII – Advance Ruling [Rules 103 to 107A], stipulate the provisions
relating to advance ruling. State GST laws also prescribe identical provisions in
relation to advance ruling.
Provisions of advance ruling under CGST Act have also been made applicable
to IGST Act vide section 20 of the IGST Act.
2. RELEVANT DEFINITIONS
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.
ANSWERS
1. Advance Ruling can be sought for the following questions:
(a) classification of any goods or services or both;
(b) applicability of a notification issued under provisions of the GST Act(s);
(c) determination of time and value of supply of goods or services or both;
(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 amounts to or results in a supply of goods or services,
within the meaning of that term.
2. The broad objective for setting up such an authority is to:
(i) provide certainty in tax liability in advance in relation to an activity being
undertaken or proposed to beundertaken by the applicant;
9. As per section 97(2), advance ruling can be sought for the following
questions:-
(a) classification of any goods or services or both
(b) applicability of a notification issued under the CGST Act
(c) determination of time and value of supply of goods or services or both
(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 or both
(f) whether applicant is required to be registered
(g) whether any particular activity with respect to any goods and/or
services, amounts to/results in a supply of goods and/or services, within
the meaning of that term.
Examples/Illustrations/Questions and Answers, as the case may be, given in the
Chapter are based on the position of GST law existing as on 30.04.2021.
1
Provisions existing as on 30.04.2021
(1A) The Advance Ruling pronounced by the National Section 103 of the
Appellate Authority under this Chapter shall be binding on CGST Act is being
- amended so as to
(a) the applicants, being distinct persons, who had provide that the
sought the ruling under sub-section (1) of section 101B advance ruling
and all registered persons having the same Permanent pronounced by
Account Number issued under the Income-tax Act, 1961 the National
(43 of 1961); Appellate
(b) the concerned officers and the jurisdictional officers Authority shall be
in respect of the applicants referred to in clause (a) and binding, unless
the registered persons having the same Permanent there is a change
Account Number issued under the Income-tax Act, 1961. in law or facts, on
the applicants,
Section 103(2) Section 103(2) being distinct
The advance ruling referred The advance ruling referred to person and all
to in sub-section (1) shall be in sub-section (1) and sub- registered
binding unless the law, facts section (1A) shall be binding persons having
or circumstances supporting unless the law, facts or the same
the original advance ruling circumstances supporting the Permanent
have changed. original advance ruling have Account Number
changed. and on the
concerned
officers or the
jurisdictional
officers in respect
of the said
applicants and
the registered
persons having
the same
Permanent
Account Number.