Last updated: January 27th, 2024 5:27 PM

Advance Ruling in GST

The Ministry of Finance made the Advance ruling under GST very taxpayer-friendly. The advance ruling helps taxpayers plan for GST liability in advance. An advance ruling is binding on both the taxpayer and the Government. Hence, the taxpayer can also use the advance ruling to avoid costly litigations. One of the major advantages of advance ruling under GST compared to advance ruling under service tax is that under GST, an advance ruling can be obtained on a proposed transaction as well as a transaction already undertaken by the appellant. To handle all aspects of advance ruling under GST, the Government has created the Authority for Advance Ruling (AAR), which can give a binding ruling to an applicant who is a registered taxable person or is liable to be registered. The provisions for advance ruling in GST can be utilised by the taxpayer to clarify matters relating to:

• Classification of goods or services or both.
• Applicability of notification issued under the GST Act.
• Determining the time and value of goods or services.
• Input tax credit admissibility of tax paid or deemed to be paid.
• Determination of the liability to tax on goods or services or both.
• GST Registration requirement of an applicant.
• Whether thing done by the applicant amounts to or results in the supply of goods or services or both.
• Other matters pertaining to the GST Act and Rules.

Procedure for Making Advance Ruling Application

An applicant seeking an advance ruling must make an application in Form GST ARA-1 with the question and a fee of Rs.5000. After receiving the application, the Authority for Advance Ruling forwards the application to the concerned officer for gathering the required records. The Authority for Advance Ruling would then examine the advance ruling application along with the records furnished by the taxpayer and concerned officer. Based on the findings, the Authority for Advance Ruling can pass an order admitting or rejecting the application. In case of rejection, the concerned authority should provide an opportunity to the applicant to explain and provide the reason for rejection of the advance ruling application. If the status of the application for the advance ruling states pending or decided in any proceedings in the case of an applicant under any of the provisions of the GST Act, the processing officer may reject the application for the advance ruling. If the application for advance ruling is accepted, the Authority for Advance Ruling must pass an order within 90 days of receipt of the application. Before the ruling, the Authority for Advance Ruling would set dates for hearing the applicant and the concerned jurisdictional officers of GST. In case of difference of opinion between two members of Authority for Advance Ruling, the matter will be referred to the Appellate Authority for Advance Ruling. If the members of Appellate Authority for Advance Ruling are also unable to come to a decision, then the matter would be deemed that no advance ruling can be given in respect of the question raised by the taxpayer.

Applicability of Advance Ruling

The advance ruling pronounced by the authority of advance ruling will be binding only:

• On the applicant
• On the concerned officer or jurisdictional officer of the applicant.

Note: If the authorities find that the applicant has obtained the advance ruling by fraud or misrepresentation of facts in such case may declare by passing an order such advance ruling to be void ab initio under section 104.

Rectification of Mistakes

The authority can amend an advance ruling within the specified period of 6 months from the date of order to rectify any mistake or error from the document or record, where it is:

• brought to the notice of the Authority or Appellate Authority on its own
• brought to the notice of the Authority or Appellate Authority by the concerned or the jurisdictional officer
• brought to the notice of the Authority or Appellate Authority by the applicant.

If such rectification improves the tax liability or reduces the amount of input tax credit, then the proceeding may note that the applicant was given an opportunity of being heard. Click here to register Private Limited Company, Public Limited Company or One Person Company