GST – Advance Ruling Provision

The introduction of Goods and Service Tax is considered as the greatest transformation for the tax regime in India. As it is set to replace all the indirect taxes and step towards the one nation one tax approach introduced by the government. However, it is a new law and all the sections of society are trying to figure out how they and their business will be impacted by this new law. Here, the advance ruling comes into the picture. Now the big question is what Advance Ruling is.

What is Advance tax Ruling?

When any taxpayer, whether they are individuals or multinational corporations have any confusion about any tax laws or rules laid thereon. They can make an application for an advance tax ruling looking for the interpretation of such laws. In other words, we can say that it’s a clarification in the written form given by the authorities in response to an application made by the taxpayer.

Purpose of Advance ruling

  • To ensure proper interpretation and understanding of tax laws.
  • It helps evade elongated litigation proceedings in the court of law, thus saving time, cost and energy.
  • Provides a transparent and cheaper way out for taxpayers in case of legal ambiguity.
  • Helps Gain a clear sight of tax expected tax liability for and business or new venture, thus attracting investment from foreign investors and boosting the domestic economy.

Advance Ruling Provisions under GST

Goods and Service Tax laws also provide for an advance ruling provisions in CHAPTER XVII of the Central Goods and Service Tax. The provisions of this chapter clearly specify that any person who wishes to receive an advance ruling under this chapter is required to file an application stating their question is the prescribed manner along with the prescribed fee for the same.

Any person who is not satisfied with the advance ruling under this section has an option to file an appeal within 30 days after the decision is passed to the appellate authority for an advance ruling.

One can apply for tax ruling under GST in respect of the following:

  1. Classification of any goods or services.
  2. If relation to applicability of any notification issued under this Act
  3. Determination of time of supply of goods and services
  4. Determination of value of goods or services supplied
  5. Determination of tax liability on goods or services supplied
  6. Admissibility of Input Tax Credit paid or deemed to have been paid
  7. If the applicant is liable under law to be registered or not.
  8. What amounts to the supply of goods or services.

When Application for Advance Ruling is Not Allowed

Any person can make an application for an advance ruling under GST, however, in the given two cases no application for the advance ruling is entertained:

  1. When proceedings relating to the same question are already pending under the Act
  2. When any cases on the same question are decided upon by any authority under the provisions of this Act.

Advance Ruling Process

  • Once the application is made, it is to be examined by the authority for an advance ruling.
  • Authority will forward it to the concerned officer and can call any records in relation to the application.
  • After examining the application and any records called upon, and listening to the applicant or his legal representative, the authority can either accept the application or reject it. However, no application can be rejected before giving an opportunity of being heard to the applicant.
  • If any application is rejected by the authority, the reasons for such rejection are to be stated in writing in the order passed for the rejection.
  • On the other hand, if an application is accepted by the authority, they shall pass an order after due consideration of the application, records called upon and statements made by the applicant and their legal representatives.
  • Once an advance ruling is passed, a certified and duly signed copy of such order is to be sent to the;
  1. applicant,
  2. concerned officer and
  3. the jurisdictional officer.
  • However, if the members of the authority have contradictory opinions on any point. Then they are required to state such point of difference and refer it to the appellate authority.

Time Period Specified for Disposal of Advance Ruling Application

Authority of advance ruling is required to pass an advance ruling in relation to any application made to them within 90 days from the date they  received the application.