Advance Ruling means a decision provided by the Authority or the Appellate Authority to an applicant on matters or on questions specified in section 97(2) or section 100(1) of the CGST Act as the case may be, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.
Objective of having a mechanism of Advance Ruling
The broad objective for setting up such an authority is to:
- provide certainty in tax liability in advance in relation to an activity proposed to be undertaken by the applicant;
- reduce litigation;
- pronounce ruling expeditiously in transparent and inexpensive manner.
Questions or matters on which advance ruling can be obtained
The Advance Ruling can be obtained on the following questions or matters:
classification of any goods or services or both;
applicability of a notification issued under provisions of the Act;
determination of time and value of the supply of goods or services or both;
admissibility of input tax credit of tax paid or deemed to have been paid;
determination of the liability to pay tax on any goods or services or both;
whether applicant is required to be registered;
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.
Matters on which Advance Ruling cannot be sought
Advance Ruling cannot be sought on any matters other than those specified above supra. Additionally, if the matter on which advance ruling is sought is already pending or decided in any proceedings in the applicant’s case under any of the provisions of the Act, then the AAR shall not admit such application.
Constitution of AAR
The AAR shall be constituted under the provisions of the respective STGST Act or UTGST Act and such authority shall be deemed to be the AAR in respect of that State or Union territory under the CGST Act also. Thus, AAR shall not be constituted under the CGST Act.
However, a State Government may, on the recommendation of the Council, notify any Authority located in another State / Union territory to act as the Authority for the State or the Union territory where Authority for Advance Ruling is not constituted.
Whether the Ruling given by AAR of one State/UT shall be applicable in another State/UT?
No. The AAR is constituted under the respective State/UT Act and not the Central Act. Hence, the Ruling given by AAR of one State/UT shall be applicable only within the jurisdiction of the concerned State/UT.
Composition of AAR
The AAR will comprise of two members – one member from amongst the officers (not below the rank of Joint Commissioner) of central tax and one member from amongst the officers of State / Union Territory tax, to be appointed by the Central and State/UT Government respectively.
Procedure of Advance Ruling
The following procedure needs to be adopted for obtaining Advance Ruling:
An e-application for obtaining an advance ruling under section 97(1) of the Act shall be made by the applicant on the common portal in FORM GST ARA-01 and shall be accompanied by a fee of INR 5,000/- each under the CGST and the respective SGST/UTGST Act. The fees is to be deposited in the manner specified in section 49 of the Act. (Section 49 deals with the procedure for payment of tax/interest/penalty/other amounts and the mechanism to make payment through Electronic Cash and Credit Ledgers).
The application, the verification contained therein and all the relevant documents accompanying such application shall be signed in the manner specified in Rule 26 of CGST Rules. Rule 26 provides for the manner of authenticating documents through Digital Signature Certificate (DSC) or e-signature as specified in the Information Technology Act.
Upon receipt of an application, the Authority shall send a copy of the same to the concerned officer and, if necessary, call upon him to furnish the relevant records. Such records to be returned as soon as possible. The word ‘concerned 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. the Authority may then examine the application along with the records and may hear the applicant, concerned officer or their authorised representative. Thereafter, the AAR will pass an order admitting or rejecting the application and send the copy of the order (admission or rejection) to the applicant and to the concerned officer. Reasons in case of rejection to be stated in the order. However, before rejection, an opportunity of hearing shall be provided to the applicant. The AAR shall not admit the application, where the question raised in the application is already pending or decided in any proceedings in the case of an applicant under any of the provisions of this Act.
If, the application is admitted, the AAR shall pronounce the advance ruling in writing within 90 days from the date of receipt of the application. Before giving its Ruling, the AAR shall examine any further materials placed before it by the applicant or obtained by the AAR and provide an opportunity of hearing to the applicant, concerned officer or their authorised representative. A copy of the advance ruling so pronounced by the AAR duly signed by the members and certified to be a true copy of its original by any member of the AAR, shall be sent to the applicant, the concerned officer and the jurisdictional officer after such pronouncement.
However, due to unavailability of the requisite form on the portal, a new rule 107A has been inserted providing for manual submission of the application vide Notification No. 55/2017-Central Tax, dated 15.11.2017 read with Circular No. 25/25/2017-GST dated 21.12.2017. Similar circulars have been issued under the respective State Acts also.
Form and manner of manual filing of application to AAR:
- An application in Form GST ARA-01 is to be submitted manually in quadruplicate.
- The application shall be accompanied by a fee of 5000/- each under the CGST and the respective SGST/UTGST Act and has to be deposited online.
- To make online payment of fees, the applicant has to fill his details using “Generate User ID for Advance Ruling” under “User Services”. After entering the email id and mobile number, a One Time Password (OTP) shall be sent to the email id. Upon submission of OTP, Systems shall generate a temporary ID and send it to the declared email and mobile number of the applicant. On the basis of this ID, the applicant can make the payment of the fee of ` 5,000/- each under the CGST and the respective SGST/UTGST Act.
- The applicant is then required to download and take a print of the challan and file the application with the AAR. .
- The application, the verification contained therein and and all the relevant documents has to be duly signed and self-attested as follows:
- in the case of an individual, by the individual himself or where he is absent from India, by some other person duly authorised by him in this behalf, and where the individual is mentally incapacitated from attending to his affairs, by his guardian or by any other person competent to act on his behalf;
- in the case of a Hindu Undivided Family, by a Karta and where the Karta is absent from India or is mentally incapacitated from attending to his affairs, by any other adult member of such family or by the authorised signatory of such Karta;
- in the case of a company, by the Chief Executive Officer or the authorised signatory thereof;
- in the case of a Government or any Governmental agency or local authority, by an officer authorised in this behalf;
- in the case of a firm, by any partner thereof, not being a minor or the authorised signatory thereof;
- in the case of any other association, by any member of the association or persons or the authorised signatory thereof;
- in the case of a trust, by the trustee or any trustee or the authorised signatory thereof; or
- in the case of any other person, by some person competent to act on his behalf, or by a person authorised in accordance with the provisions of section 48 of the CGST/SGST Act.
Appeal against the Ruling pronounced by the AAR
An appeal can be filed before the AAAR by the concerned officer, the jurisdictional officer or an applicant aggrieved by an Advance Ruling within 30 days of communication of the said ruling to the concerned person. Further, AAAR may extend this period by further period not exceeding 30 days, if satisfied that the appellant was prevented by a sufficient cause from presenting the appeal within the said period of 30 days.
Further, an appeal against advance ruling issued under Section 98(6) shall be made by an applicant on the common portal in Form GST ARA-02 along with fees of ` 10,000/- each under the CGST and the respective SGST/UTGST Act to be deposited in the manner specified in section 49 of the Act. However, an appeal by the concerned officer or jurisdictional officer shall be in Form GST ARA-03 on the common portal and no fees shall be payable by the said officer.
Since, the required forms are not made available on the portal; manual filing of appeal to AAAR is provided in the CGST and SGST/UTGST Rules as stated above subject to adherence of conditions and procedure as prescribed in Circular No. 25/25/2017-GST dated 21.12.2017. Similar circulars have been issued by States also. This Circular inter alia provides that:
- An appeal shall be filed manually in quadruplicate, in FORM GST ARA-02 (physical form) along with fees of ` 10,000/- each to be paid online under the CGST and the respective SGST/UTGST Act. The procedure for payment of fee is same as stated above.
- An appeal by the concerned officer or the jurisdictional officer shall also be filed manually in quadruplicate in Form GST ARA-03 and no fee shall be payable by the said officer for filing the appeal.
- Further, the appeal, the verification contained therein and all the relevant documents accompanying such appeal must be signed and self-attested:
- in the case of the concerned officer or jurisdictional officer, by an officer authorized in writing by such officer; and
- in the case of an applicant, in the manner specified above
Constitution of AAAR
The AAAR shall be constituted under the provisions of the respective SGST Act or UTGST Act and such authority shall be deemed to be the AAAR in respect of that State or Union territory under the CGST Act also. Thus, AAAR shall not be constituted under CGST Act.
However, a State Government may, on the recommendation of the Council, notify any Appellate Authority located in another State / Union territory to act as the Appellate Authority for the State or the Union territory where AAAR is not constituted.
Composition of AAAR
The AAAR will comprise of – Chief Commissioner of Central tax as designated by the Board and Commissioner of State / Union Territory tax having jurisdiction over the applicant.
Time limit within which Appellate order is to be passed
The order, either confirming or modifying the Ruling appealed against or referred to, shall be passed within 90 days from the date filing of appeal or reference, after giving the parties to the appeal or reference an opportunity of being heard. A copy of the Advance Ruling so pronounced duly signed by the members and certified in the manner prescribed shall be sent to the applicant and the appellant, the concerned officer/jurisdictional officer of the CGST and SGST/UTGST and the AAR after such pronouncement.
Rectification of ruling of AAR or order passed by AAAR
In case there is any error apparent on the face of the records, the AAR or AAAR as the case may be, can amend the original order passed by it, if such error is noticed by the AAAR or AAAR on its own record or is brought to its notice by the concerned officer, the jurisdictional officer, the applicant or the appellant, within a period of 6 months from the date of said order.
However, no rectification which has the effect of enhancing the tax liability or reducing the amount of admissible input tax credit shall be made unless the applicant or the appellant has been given an opportunity of being heard.
Appeal before the High Court or the Supreme Court against the ruling of AAAR
The CGST /SGST Act do not provide for any appeal against the ruling of AAAR. Thus, no further appeals lie and the ruling shall be binding on the applicant as well as the jurisdictional officer in respect of applicant. However, Writ Jurisdiction may lie before the Hon’ble High Court or Special Leave petition before the Hon’ble Supreme Court.
Where does the application for AAR or the appeal before AAAR shall be filed
The application or the appeal shall be filed in the jurisdictional office of the respective State AAR or State AAAR respectively.