Advance Ruling under CGST/IGST Act, 2017 Explained

Advance Ruling is a legal procedure under the CGST/IGST Act, 2017, which is designed to provide clarity to taxpayers regarding the interpretation of the provisions of the GST law. It is a mechanism where an individual or a business can obtain a ruling from the Authority for Advance Ruling (AAR) or the Appellate Authority for Advance Ruling (AAAR) regarding the taxability of a particular transaction.

The main objective of Advance Ruling is to provide certainty to taxpayers on issues that might arise in the future, which can help them avoid unnecessary litigation and penalties. It is also designed to promote transparency and consistency in the application of the GST law throughout the country.

Eligibility for Advance Ruling

Any registered person or an applicant who intends to register for GST can apply for Advance Ruling. The application can be made on any question of law or fact that pertains to the GST law. The applicant can seek an advance ruling on any of the following matters:

Classification of goods or services under the GST law
Applicability of a notification issued under the GST law
Determination of time and value of supply under the GST law
Admissibility of input tax credit under the GST law
Liability to pay tax on a particular transaction under the GST law

Authority for Advance Ruling (AAR)

The AAR is a body that is set up by the State Government or the Union Territory Government to deal with Advance Ruling applications. The AAR consists of a Chairman who is either a retired High Court Judge or a retired Chief Commissioner of Central Excise, and two members who are of the rank of Joint Commissioner of Central Tax. The AAR is an independent body that is empowered to deal with applications for Advance Ruling.

The AAR has the power to:

Provide an Advance Ruling on the questions of law or fact that are raised by the applicant
Provide an Advance Ruling on the questions of law or fact that are raised by the concerned officer
Reject the application if it is found to be outside the scope of Advance Ruling
Reject the application if it is found to be infructuous or frivolous

Appellate Authority for Advance Ruling (AAAR)

The AAAR is a body that is set up by the State Government or the Union Territory Government to deal with appeals against Advance Ruling orders passed by the AAR. The AAAR consists of a Chairman who is either a retired High Court Judge or a retired Chief Commissioner of Central Excise, and two members who are of the rank of Joint Commissioner of Central Tax. The AAAR is an independent body that is empowered to deal with appeals against Advance Ruling orders.

The AAAR has the power to:

Confirm, modify or reject the Advance Ruling passed by the AAR
Pass an Advance Ruling on the questions of law or fact that are raised by the appellant

Procedure for Advance Ruling

The procedure for Advance Ruling is as follows:

The applicant has to file an application in Form GST ARA-01
The application has to be accompanied by a fee of Rs. 5,000
The AAR will examine the application and may ask for additional information or documents
The AAR will provide an opportunity of being heard to the applicant and the concerned officer
The AAR will pass an Advance Ruling within 90 days from the date of receipt of the application
If the applicant or the concerned officer is aggrieved by the Advance Ruling passed by the AAR, they can file an appeal with the AAAR within 30 days from the date of receipt of the Advance Ruling
The AAAR will examine the appeal and may ask for additional information or documents
The AAAR will provide an opportunity of being heard to the appellant and the concerned officer
The AAAR will pass an order within 90 days from the date of receipt of the appeal

Conclusion

The Advance Ruling mechanism under the CGST/IGST Act, 2017 is a very useful tool for taxpayers to obtain clarity on GST-related matters. It is designed to provide certainty and promote transparency in the application of the GST law. The AAR and AAAR are independent bodies that are empowered to deal with Advance Ruling applications and appeals. The procedure for Advance Ruling is simple and straightforward, and it can help taxpayers avoid unnecessary litigation and penalties.