Advance Ruling under Goods and Services Tax (GST)

In every country, taxation laws are different and sometimes quite complex. With the changing global environment, there are new industries and commodities emerging on a daily basis and advance ruling helps the organisation to get written opinion or authoritative decision by Advance ruling Authority on tax consequences of transactions or proposed transaction or an assessment. In this spirit, Model GST Law provides for Advance Ruling under Goods and Services Tax

Advance Ruling

Advance ruling is a written decision provided by the Authority or, as the case may be, Appellate Authority to an applicant (as specified in this Act) on the matters or on questions of

(a) Classification of any goods and/or services

(b) Applicability of any notification issued having a bearing on the rate of tax

(c) The principles to be adopted for the purposes of determination of value of the goods and/or services

(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 and/or services

(f) Determination of whether applicant is required to be registered under GST

(g) Determination of whether any particular thing done by the applicant with respect to any goods and/or services amounts to or results in a supply of goods and/or services, within the meaning of that term.

Every application shall be accompanied with the fees prescribed.

Cases where Advance Ruling under Goods and Services Tax Act cannot be applied for –Authority shall not admit application where the question raised by the applicant is

(a) already pending in the applicant’s case before any First Appellate Authority, the Appellate Tribunal or any Court

(b) the same matter is already decided by the First Appellate Authority, the Appellate Tribunal or any Court

(c) the same, as, in a matter already pending in any proceedings in the applicant’s case

(d) the same, as, in a matter in the applicant’s case already decided by the adjudicating authority or assessing authority, whichever is applicable.

Provided further that no application shall be rejected unless an opportunity has been given to the applicant of being heard and giving reason for such rejection in the order.

Advance ruling under Goods and Services Tax shall be binding only on

(a) the applicant who sought it in respect of any matter

(b) the jurisdictional tax authority in respect of applicant (prescribed officer)

Advance ruling shall be binding unless the law, facts or circumstances supporting the original advance ruling have changed.

Procedure on Receipt of application for Advance ruling under Goods and Services Tax Act

(a) On receipt of application, the authority forwards a copy of application to the prescribed officer and shall call upon to furnish the relevant records, if necessary.

(b) After examining the records and hearing the applicant or authorized representative and the prescribed officers, Authority shall either admit or reject the application by passing an order in writing giving reason. A copy of order is sent to both applicant and prescribed officer.

(c) The members of Authority shall after examining further material and after providing opportunity of being heard to both applicant and prescribed officer shall pass an order in writing within 90 days of receipt of such application. A copy of order shall be sent to both applicant and prescribed officer.

(d) where there is difference in opinion of members of authority on point or points and no conclusion is reached then it shall be deemed that no advance ruling can be issued.

Appeal to Appellate Authority

(a) Any aggrieved party from the advance ruling either the prescribed officer or the applicant may appeal in the Appellate Authority against such order within 30 days of communication of such order to them.

(b) The Appellate Authority may after giving opportunity of being heard to the parties in appeal such order as it may deem fit, confirming or modifying the ruling appealed against within 90 days from filing of the appeal.

(c) A duly signed copy of the ruling pronounced by the Appellate Authority shall be sent to the applicant and the prescribed officers and advance ruling authority.

Rectification of Advance Ruling under Goods and Services Tax Act

(a) Any mistake apparent from record may be amended by the Authority or the Appellate Authority, as the case may be, if such mistake is noticed by the Authority or the Appellate Authority on its own or brought to its notice by prescribed officer or the applicant within period of 6 months from the date of the order.

(b) No rectification which has an effect of enhancing tax liability or reducing the amount admissible for input credit shall be made unless proper notice and a reasonable opportunity of being heard is given to the applicant.

Advance ruling under Goods and Services Tax Act to be void in certain circumstances

Where the advance ruling is obtained by applicant by suppression of material facts or misrepresentation of facts, it may be declared void ab initio by the Authority or the Appellate Authority, as the case may be. An order in writing shall be sent to prescribed officers and the applicant.

All the provisions of the Act shall apply to the applicant as if no advance ruling was ever made, but before passing such order a reasonable opportunity of being heard shall be given to the applicant.

Powers of Authority or Appellate Authority

Authority and Appellate authority have

(a) powers regarding discovery, inspection and compelling production of books of accounts

(b) powers enforcing the attendance of any person and examining him on oath

(c) powers of civil court under the Code of Civil Procedure, 1908 but not for the purpose of Chapter XXVI of Code of Criminal  Procedure, 1973 and every proceeding before the Authority shall be deemed to be a judicial proceeding.