Authority for Advance Rulings (AAR) under GST : An Overview

An Authority for Advance Rulings (AAR) is a platform to resolve the doubts regarding Goods and Services Tax on questions specified under the CGST act. 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 Government authorities. Seeking an advance ruling is inexpensive and the procedure is simple and expeditious.

“Advance ruling” means a 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 of the CGST Act, 2017, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.

Objectives of Advance Ruling

The broad objectives for setting up a mechanism of Advance Ruling include:

Provide certainty in tax liability in advance, in relation to an activity proposed to be undertaken by the applicant;
Attract Foreign Direct Investment (FDI);
Reduce litigation;
Pronounce ruling expeditiously in transparent and inexpensive manner;

What are the matters for which advance ruling can be sought?

(a) Classification of any goods or services or both;

(b) Applicability of a notification issued under the provisions of CGST Act;

(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 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.

Section 100(1) of the CGST Act, 2017 provides that concerned officer, the jurisdictional officer or an applicant aggrieved or unhappy by any advance ruling pronounced by the Authority for Advance Ruling, may appeal to the Appellate Authority for Advance Ruling(AAAR) . Thus it can be seen that a decision of the Appellate authority is also treated as an advance ruling.

Procedure for obtaining Advance Ruling

The applicant desirous of obtaining advance ruling should make application to AAR in a prescribed form and manner.An application for obtaining an advance ruling shall be made on the common portal in FORM GST ARA-01 along with Rs.5000. 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 the CGST Rules, 2017. Upon receipt of an application, the AAR shall send a copy of application to the officer in whose jurisdiction the applicant falls and call for all relevant records. The AAR may then examine the application along with the records and may also hear the applicant. Thereafter the AAR will pass an order either admitting or rejecting the application.

Application for advance ruling shall not be admitted in following cases:
where the question raised in the application is already pending or,
where the question in the application has already been decided in any earlier case of an applicant.

When will the authority give their decision?

If the application is rejected, it should be only after an opportunity of being heard is provided to the applicant and by way of a speaking order giving the reasons for rejection.
If the application is admitted, the AAR shall pronounce its ruling within ninety days of receipt of application.
If the members of the Authority differ in opinion on any point, they will refer the point to the Appellate Authority.

Appeals against order of AAR

If the applicant is aggrieved with the finding of the AAR, he can file an appeal with AAAR. An appeal against the advance ruling shall be made by an applicant on the common portal in FORM GST ARA-02 and shall be accompanied by a fee of ten thousand rupees. Similarly, if the prescribed or jurisdictional officer of CGST/SGST does not agree with the finding of AAR, he can also file an appeal with AAAR. An appeal against the advance ruling shall be made by the concerned officer or the jurisdictional officer referred to in section 100 on the common portal in FORM GST ARA-03 and no fee shall be payable by the said officer for filing the appeal.

The appeal (by the applicant or jurisdictional officer), the verification contained therein and all the relevant documents accompanying such appeal shall be signed, –
(a) In the case of the concerned officer or jurisdictional officer, by an officer authorised in writing by such officer; and
(b) In the case of an applicant, in the manner specified in rule 26 (DSC/e-signature).

Any appeal must be filed within thirty days from the date on which the advance ruling is communicated to the concerned officer, the jurisdictional officer and applicant.The Appellate Authority must pass an order after hearing the parties to the appeal within a period of ninety days of the filing of an appeal. If members of AAAR differ on any point referred to in appeal, it shall be deemed that no advance ruling is issued in respect of the question under appeal.

To conclude it can be stated that the law makes a comprehensive provision for advance rulings to ensure that disputes are minimal. Timelines are also given within which the ruling is to be given by the concerned authority. The aim is to provide certainty to the taxpayer with respect to his obligations under the GST Act and an expeditious ruling, so that the relationship between the taxpayer and administration is smooth and transparent and helps to avoid unnecessary litigation.

From,

Krishnakant Jakhotia

Mobile No :-9422507911

Email Id :- taxtalknew@gmail.com