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Advance Ruling in Goods & Service Tax

Advance ruling means a decision provided by the Authority or the Appellate Authority to an applicant on specified question or matters in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.

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

  1. provide certainty in tax liability in advance, in relation to an activity proposed to be undertaken by the applicant
  2. attract Foreign Direct Investment (FDI)
  3. reduce litigation
  4. pronounce ruling expeditiously in transparent and inexpensive manner

Specified Matter for which Advance Ruling can be sought:

The applicant can seek the advance ruling on the following matters specified under Goods & Service Tax Act:

  1. classification of any goods or services or both
  2. applicability of a notification issued under the provisions of Goods & Service Tax Act
  3. determination of time and value of supply of goods or services or both
  4. admissibility of input tax credit of tax paid or deemed to have been paid
  5. determination of the liability to pay tax on any goods or services or both
  6. whether applicant is required to be registered
  7. 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.

The concerned officer, the jurisdictional officer or an applicant aggrieved by any advance ruling pronounced by the Authority for Advance Ruling, may appeal to the Appellate Authority. Thus, decision of the Appellate authority is also treated as an advance ruling.

Procedure for making Advance Ruling Application:

  1. An applicant required to make an application in Form GST ARA-1 with the question and a fee of Indian Rupees Five Thousand (INR 5,000). Once the application is received, it will be forwarded to the concerned officer for gathering the concerned records.
  2. The Authority for Advance Ruling examine the advance ruling application along with the records furnished by applicant and concerned officer.
  3. Based on records, the Authority for Advance Ruling can pass an order admitting or rejecting the application. The applicant must be provided an opportunity of being heard in case rejection and reason for rejection of the advance ruling application must be stated in the order.
  4. The application for advance ruling not be admitted in case said question raised in the application is already pending or decided in any proceedings under any of the provisions of the GST Act.
  5. 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.
  6. In case different opinion provided by two members of Authority for Advance Ruling, the matter required to be reviewed by Appellate Authority for Advance Ruling. If the members of Appellate Authority for Advance Ruling unable to come into a conclusion, the said matter deemed that no advance ruling can be provided to an applicant.

- As on 1st July 2019