What are the Questions for which Advance Ruling Can be Sought?

GST Advance Ruling?

What are the Questions for which Advance Ruling Can be Sought?[SECTION 97] of CGST

What is Advance Ruling?

An advance ruling is a Remedy available to the applicant that aids them in planning their activities which are liable for payment of GST, well in advance. It helps Applicant in determining the Tax Liability, as the ruling given by the Authority for Advance Ruling (AAR) is binding on the applicant as well as TAX Authorities. Advance Ruling is an initiative to reduce the long, tedious and expensive Litigation at later date by bringing certainty to the interpretation of the laws.

Advance Ruling under section 95(a) of CGST Act,2017 is defined as decision provided by the Authority or the 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, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.

 Why Advance Ruling?

The Rationale behind setting up a mechanism of Advance Ruling are:

  • to provide certainty in tax liability in advance in relation to an activity proposed to be undertaken by the applicant;
  • to attract Foreign Direct Investment (FDI)
  • to reduce the scope of future litigation
  • to seek the Decision of the Tax Authority in a timely, transparent and inexpensive way

 

APPLICANT CAN SEEK ADVANCE RULING FOR THE FOLLOWING QUESTIONS.

(a)          whether the Supply be classified as any goods or services or both

(b)          whether the Notification issued under the provisions of CGST Act applies to the Applicant or not

(c)           In the case Where the determination of time and value of supply is disputed, 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 the applicant is required to be registered

(g)          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.

 

APPLICABILITY OF ADVANCE RULING [SECTION 103]

An advance ruling pronounced by AAR or AAAR shall be binding

  1. only on the applicant and
  2. on the concerned officer or the jurisdictional officer in respect of the applicant.
  • This clearly means that an advance ruling is not applicable to similarly placed other taxable persons in the State.
  1. It is only limited to the person who has applied for an advance ruling.

NOTE: The law does not provide for a TIME FRAME for which the Advance Ruling shall apply.

However, 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.

 

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