Unlocking GST Insights: Navigating Advance Rulings

In the intricate landscape of Goods and Services Tax (GST), businesses often grapple with complex questions related to the classification of goods, applicability of notifications, time and value determination, admissibility of Input tax credit, and more. To provide clarity and streamline decision-making, the GST Act introduces the mechanism of Advance Ruling, elucidated in Sections 95 to 106.

Decoding Advance Ruling [Section 95]:

Advance Ruling, as defined in Section 95(a), is a decision furnished by the Authority or the Appellate Authority to an applicant. The ruling addresses matters or questions specified in sub-section (2) of section 97 or sub-section (1) of section 100. These matters pertain to the supply of goods or services, either in progress or proposed by the applicant.

To embark on this journey of clarity, an applicant, as per Section 95(c), is any person registered or desiring registration under the GST Act. The application, referred to in Section 95(d), is a formal submission made to the Authority under sub-section (1) of section 97. The pivotal body overseeing Advance Ruling is the Authority itself, as stipulated in Section 95(e).

Exploring Questions Eligible for Advance Ruling [Section 97]

Section 97 broadens the scope of Advance Ruling, allowing businesses to seek clarity not only on ongoing transactions but also on proposed ones. The questions that can be posed to the Authority include:

• Classification of goods or services or both.

• Applicability of CGST Act notifications

• Determination of time and value of supply

• Admissibility of Input tax credit of tax paid or deemed to have paid

• Determination of liability to pay tax on any goods or services

• Requirement for registration

• Determining if a specific action amounts to a supply of goods or services or both.

Matters which cannot be questioned before AAR:

• Question already pending in any proceedings in the case of an applicant under any of the provisions of the Act.

• Question already decided in any proceedings in the case of an applicant under any of the provisions of the Act.

Navigating the Authority for Advance Ruling (AAR) and Appellate Authority for Advance Ruling (AAAR) [Section 96 and 99]:

The framework for Advance Ruling is intricately woven into the state and union territory jurisdictions. AAR and AAAR, constituted under the State or Union Territory Goods and Services Tax Act, are deemed the authorities for Advance Ruling under the CGST Act. This decentralized structure ensures that rulings are applicable only within the geographical confines of the concerned state or union territory.

Rule 103 states that the Government shall appoint officers not below the rank of Joint Commissioner as member of the Authority for Advance Ruling.

Procedure for Obtaining Advance Ruling [Section 98]:

Application Submission:

The applicant, seeking an advance ruling, must submit an application to the AAR in the prescribed form and manner, accessible on the Common portal. A fee of five thousand rupees (Rs. 5,000 each towards CGST and SGST) accompanies the application.

Documentation and Verification:

The application, along with relevant documents, must be signed in the prescribed manner.

Initiation of Process:

Upon receiving the application, the AAR initiates the process by sending a copy to the concerned officer. If necessary, the AAR may call for all relevant records from the concerned officer.

Examination and Hearing:

The AAR thoroughly examines the application and associated records. After this examination, the applicant or their authorized representative is heard. Subsequently, the AAR passes an order, either admitting or rejecting the application.

Admissibility Criteria:

Applications will not be admitted if the raised question is already pending or decided in proceedings concerning the applicant under any provisions of the GST Act.

Speaking Order for Rejection:

In cases of rejection, a speaking order, providing reasons for rejection, is issued. The rejection cannot occur without affording the applicant an opportunity for a hearing.

Notification of Order:

A copy of the order (admitting or rejecting the application) is sent to the applicant and the concerned officer.

Adjudication Timeline:

In cases of admission, the AAR commits to pronouncing its ruling within 90 days of receiving the application. Before giving its ruling, it shall examine the application and any further material placed before it by the applicant or obtained by the Authority.

Opportunity of Being Heard:

Before delivering the ruling, the AAR provides an opportunity for the applicant, their authorized representative, and the concerned officer to be heard.

Referral to AAAR in Case of Disagreement:

In instances where there is a difference of opinion among the two members of the AAR, the matter is referred to the AAAR for resolution. If the AAAR also cannot reach a common conclusion, it is deemed that no advance ruling can be given.

Communication of Advance Ruling:

A duly signed and certified copy of the advance ruling is sent to the applicant, the concerned officer, and the jurisdictional officer.

Navigating Appeals and Rectifications [Section 100 and 101]

In case of disagreement with the AAR`s findings, an applicant or the concerned officer can file an appeal with the AAAR. The appeal shall be filed within 30 days of the AAR`s order. The Appellate Authority may allow for an additional 30 days for filing an appeal, if it is satisfied that there was a sufficient cause for delay in presenting the appeal. The AAAR, after hearing the parties, passes an order within 90 days.

The appeal has to be in the prescribed form and has to be verified in the prescribed manner. An appeal has to be filed by the applicant along with fee of Rs. 10,000/- each under CGST and SGST Act. However, if the concerned officer or jurisdictional officer is aggrieved by the decision of AAR, then no fee is required to be paid.

Rectification of mistakes is another avenue available within six months from the date of the AAR or AAAR order. The authority holds the power to amend orders after hearing the parties involved.

• The appeal, along with its verification and all relevant documents, must be signed as follows:

• In the case of the concerned officer or jurisdictional officer, an officer authorized in writing by such officer.

• In the case of an applicant, in the specified manner.

• The Appellate Authority is mandated to pass an order after conducting a hearing with the parties involved in the appeal.

• This order is expected to be issued within a period of 90 days from the filing of the appeal.

• If members of the AAAR hold differing opinions on any point referred to in the appeal, it is deemed that no advance ruling can be issued concerning the question under appeal

• The Appellate Authority has the discretion to pass an order as it deems fit, which may include confirming or modifying the ruling appealed against or referred to by the Advance Ruling Authority.

• The communicated recipients include the applicant, the concerned officer, the jurisdictional officers, and the Authority.

Binding Clarity: Applicability and Voidance [Section 103 and 104]:

An Advance Ruling, as per Section 103, binds only the applicant and the concerned or jurisdictional officer in respect of that applicant. This underscores that the ruling is not universally applicable but is tailored to the specific scenario presented by the applicant.

The law does not provide for a fixed time period for which the ruling shall apply. Instead, it has been provided that advance ruling shall be binding till the period when the law, facts or circumstances supporting the original advance ruling have not changed.

However, Section 104 introduces a safeguard. If an Advance Ruling is obtained through fraudulent means, suppression of facts, or misrepresentation, the authorities can declare it void ab-initio. In such cases, the provisions of the CGST Act apply as if the ruling had never been made.

Empowering AAR and AAAR: Powers and Procedures [Section 105 and 106]:

AAR and AAAR, as per Sections 105 and 106, wield the powers of a civil court under the Code of Civil Procedure, 1908. They are deemed civil courts for certain legal provisions but are excluded from Chapter XXVI of the Code of Criminal Procedure, 1973.

Conclusion:

In essence, the Advance Ruling mechanism under the GST Act emerges as a powerful tool for businesses seeking clarity in the labyrinth of tax regulations. It not only streamlines decision-making but also ensures that rulings are nuanced to the specific circumstances of the applicant, contributing to a more robust and adaptable tax framework.

Note: This article is intended for informational purposes and does not substitute professional advice. Readers are advised to refer to the latest provisions of the GST Act and seek expert guidance for specific scenarios.