An Advance Ruling under gst mechanism is sought when there is confusion regarding the law. Advance ruling helps the applicant in planning his activities, which are liable for payment of GST, well in advance. Seeking an advance ruling is inexpensive and the procedure is simple and expeditious.

Objectives for setting up a mechanism of seeking Advance Ruling are:

• Provide certainty in tax liability in relation to an activity proposed to be undertaken or undertaken by the applicant;

• Attract Foreign Direct Investment (FDI) by ensuring certainty in taxation aspects of transactions

• It helps in avoiding long drawn and expensive litigation at a later date

• Pronounce ruling expeditiously in a transparent and inexpensive manner

• It 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 Tax authorities.

Under GST, Advance ruling can be obtained for a proposed transaction as well as a transaction already undertaken by the appellant (on going). Ruling cannot be taken for past transactions.

Who can apply for Advance Ruling under GST?

Any person registered under GST law can apply for advance ruling. Though, it is not mandatory to have a registration at the time of making an application for advance ruling. However, in case of an unregistered person it is mandatory to quote his PAN unless he is a non-resident.

A recipient of service cannot seek Advance Ruling unless it is in relation to availment of input tax credit by such recipient.

What question on which advance ruling can be sought?

  • Classification of any goods or services or both;
  • Applicability of a notification issued under provisions of this Act;
  • Determination of Time and Value of 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.

Below Questions are outside the scope of Advance ruling

  • Issues relating to Place of Supply
  • Issues relating to Transitional Input tax credit
  • In respect of past transactions
  • If matter is already pending or decided in any proceedings
  • E-way bill requirements
  • Anti-profiteering issues
  • Restraining officers from initiating an action/proceeding under the Act.
  • If applicant is not supplying the goods or services for which advance ruling is sought
  • Further relating to – Transportation of goods, Return related, liability to deduct tds, foreign trade policy and determining if transaction is export.

What is the procedure for applying Advance ruling under GST?

An applicant who seeks an advance ruling shall make an application in the prescribed FORM GST ARA-01 together with a fee of Rs 10,000/-(CGST 5000 + SGST 5000) stating the question on which such a ruling is sought. Amount needs to be paid utilising Electronic Cash ledger only.

Pronounce its advance ruling in writing on the question(s) specified in the application within 90 days from the date of receipt of application. A copy of the advance ruling, shall be sent to the applicant and to the concerned tax officer after pronouncement. A copy of the advance ruling shall be certified to be a true copy of its original by any member of the AAR.

There is no provision for withdrawal of application submitted for advance ruling, but there is no prohibition either. In the case of M/s. Compass Group (India) Support Services Private Limited at the Karnataka AAR, the application was allowed to be withdrawn.

Orders passed by Authority of Advance Ruling are available on www. gstcouncil.gov.in

Advance Ruling under GST
Summary of Advance Ruling under GST
Advance Ruling under GST
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