Advance Ruling
What is Advance Ruling?
What is an Advance It means knowing the law in advance.
Ruling?
“Advance ruling” means a decision provided by the Authority or the
Appellate Authority to an applicant on specified matters, in relation to the
supply being undertaken or proposed to be undertaken by the applicant.
Uniqueness of The definition of Advance ruling given under the Act is a broad one and an
Advance Ruling improvement over the existing systems of advance rulings under Customs
under GST and Central Excise Laws. Under the old system, advance rulings can be given
only on a proposed transaction, whereas under GST, Advance ruling can be
obtained on a proposed transaction as well as a transaction already
undertaken by the appellant.
Objectives of Advance Ruling
Broad Objectives (i) Provide certainty in tax liability in advance;
(ii) Attract Foreign Direct Investment (FDI)
(iii) Reduce litigation
(iv) Pronounce ruling expeditiously in a transparent and inexpensive manner.
To whom the Advance Ruling is applicable
Applicable Shall be binding only on the applicant and on the concerned officer or the
jurisdictional officer in respect of the applicant.
Not Applicable An advance ruling is not applicable to similarly placed other taxable persons
in the State.
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Time period for applicability of Advance Ruling
No time limit The law does not provide for a fixed time period for which the ruling shall
specified apply.
Instead, it has been provided that advance ruling shall be binding till the
period when the law, facts or circumstances supporting the original
advance ruling have not changed.
Authority in respect of State and Union Territory
State Level not the Both the Authority for Advance Ruling (AAR) & the Appellate Authority for
Central Level Advance Ruling (AAAR) is constituted under the respective State/Union
Territory Act and not the Central Act.
POS Matters not It is also for this reason that questions on determination of place of supply
allowed cannot be raised with the AAR or AAAR.
Application to Authority (Form GST ARA-01) Fee: Rs. 5,000
Matters of 1. Classification of any goods or services or both;
Application 2. Applicability of a notification
3. Determination of time and value of supply
4. Admissibility of input tax credit
5. Determination of the liability to pay tax
6. Whether applicant is required to be registered;
7. Whether any particular thing done by the applicant amounts to supply
of goods or services or both.
Procedure of (1) On receipt of an application, the Authority shall forward a copy to the
Authority with concerned officer and, if necessary, demand the relevant records.
respect to
Application (2) The Authority may either admit or reject the application.
Provided that the Authority shall not admit the application where the
question raised in the application is already pending or decided in any
proceedings in the case of an applicant under any of the provisions of this
Act.
(3) A copy of every order made shall be sent to the applicant and to the
concerned officer.
(4) Where an application is admitted, the Authority shall, after examining
material as may be placed before it and after providing an opportunity of
being heard, pronounce its advance ruling on the question specified in the
application.
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(5) Where the members of the Authority differ on any question on which the
advance ruling is sought, they shall state the point or points on which they
differ and make a reference to the Appellate Authority for hearing and
decision on such question.
(6) The Authority shall pronounce its advance ruling in writing within 90 days
from the date of receipt of application.
(7) A copy of the advance ruling duly signed and certified shall be sent to the
applicant, the concerned officer and the jurisdictional officer after such
pronouncement.
Appellate Authority for Advance ruling
Appeal to appellate The concerned officer, the jurisdictional officer or an applicant aggrieved by
authority Fee: Rs. any advance ruling pronounced, may appeal to the Appellate Authority.
10,000
Form GST ARA-02 for appeal by applicant with fee of 10,000
Form GST ARA-03 for appeal by department with no fee.
Time limit to file Every appeal under this section shall be filed within a period of 30 days from
appeal the date on which the ruling is communicated.
30 days extension can be demanded.
Time limit to pass The order shall be passed within a period of 90 days from the date of filing
order of the appeal.
Differences of Where the members of the Appellate Authority differ on any point or points
opinion referred to in appeal or reference, it shall be deemed that no advance ruling
can be issued in respect of the question under the appeal or reference.
Copy of the order A copy of the advance ruling pronounced by the Appellate Authority duly
signed by the Members and certified in such manner as may be prescribed
shall be sent to the applicant, the concerned officer, the jurisdictional officer
and to the Authority after such pronouncement.
Rectification of Advance ruling
Can be done by The Authority or the Appellate Authority may amend any order passed by it
both AAR & AAAR to rectify any error, if such error is noticed by the Authority or the Appellate
Authority on its own accord, or is brought to its notice by the concerned
officer, the jurisdictional officer, the applicant or the appellant within a period
of 6 from the date of the order.
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Provided further that the said period of six months shall not apply in such
cases where the rectification is purely in the nature of correction of a clerical
or arithmetical error, arising from any accidental slip or omission.
Advance ruling to be void
When void Where the Authority or the Appellate Authority finds that advance ruling
pronounced by it
by the applicant or the appellant by
~~ fraud or
~~ suppression of material facts or
~~ misrepresentation of facts,
it may declare such ruling to be void ab-initio.
Powers of Authority or Appellate Authority
Powers of a Civil The Authority or the Appellate Authority shall, for the purpose of exercising
Court its powers regarding—
(a) discovery and inspection;
(b) enforcing the attendance of any person and examining him on oath
(c) issuing commissions and compelling production of books of account and
other records have all the powers of a civil court under the Code of Civil
Procedure, 1908.
Self-regulatory The Authority or the Appellate Authority shall have power to regulate its own
mechanism procedure.
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Case law: Global Reach Education Services Pvt. Ltd. (2018) 96 [Link] 107 (AAAR-West Bengal)
Recently, in the case of Global Reach Education Services Pvt Ltd, (2018) 96 [Link] 107
(AAARWest Bengal), the Appellant Authority for Advance Rulings (AAAR), West Bengal has confirmed
the decision of Authority for Advance Ruling (AAR), that the services of-
~ promoting the courses of the foreign university in India;
~ finding suitable prospective students to undertake the course;
~ recruiting and
~ assisting in recruiting the suitable students shall be treated as intermediary services in terms of
Section 2(13) of the IGST Act, 2017, and not ‘Export of Services’.
Here, the assessee appealed against the ruling of the AAR, that they are ‘intermediary’ of the Foreign
Universities. The appellant contended that they are providing ‘business auxiliary services’ to the
Foreign Universities rather than intermediary services, as they provide services of promoting and
marketing of Foreign Universities courses in India on their own account which does not include the
function of an intermediary as to facilitation and arrangement of supply of goods or services between
two or more persons.
The AAAR here observed that the in the instant case, the appellant was free to refer students to various
foreign universities of its choice. Further, the fee paid to the Appellant was not tied to the promotional
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activities or expenses incurred to promote the courses of foreign universities but as a percentage of
fee paid by the students who got admitted to the universities. Thus, no consideration was paid in spite
of incurring expenses by the Appellant for promoting activities of universities, if no student joined the
university.
Whereas, in the case of M/s Sunrise Immigration Consultants Private Ltd. v CCE & ST, Chandigarh, cited
by the appellant, the AAAR observed that the order passed there by the Tribunal was completely
different from this case. As in that case, the tribunal considered the ‘intermediary’ under Rule 2(f) of
the Place of Provision of Service Rules, 2012 (POPS), in relation to ‘main service’. Further, the definition
of ‘intermediary’ under Section 2(13) of the IGST Act, is not same as that under Rule 2(f) of the POPS
Rules, 2012, in as much as under GST an intermediary is an entity who arranges/facilitates for the
supply of services of another entity, which may include the ancillary services, whereas under POPS
Rules, the intermediary arranges/facilitates for the provisions of services of the main service provider.
Therefore, the services provided carried out by the appellant would be considered as an intermediary
in terms of Section 2(13) of the IGST Act.
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