Advance Ruling under

GST
SECTION 95-106
 Why Litigation arises?

Constitutional issues

Jurisdictional issues

Law not clear/Interpretational issues

 Tax Disputes- Rate/classification/valuation/ITC etc

Contravention of statutory provisions

Imposition of penalties
 Definitions: Section 95
Advance ruling means a decision provided by the Authority or the Appellate Authority to
an applicant on matters or on questions specified Section 97 or Section 100, in relation to
the supply of goods or services or both being undertaken or proposed to be undertaken
by the applicant;
Applicant means any person registered or desirous of obtaining registration under this
Act;
Application means an application made to the Authority under Section 97
What is advance ruling?
Advance ruling is

a) a process of determination

b) by the prescribed authority only

c) of a question of law or fact

d) relating to liability of GST

e) on proposed supply transaction or

f) to be undertaken by an applicant
 Certainty
in tax
liability

Transparent and
Objectives of
inexpensive Advance Attract FDI
Ruling

Reduce
litigation
Advantages of advance ruling
It affords finality to a two way interpretation, thereby avoiding of
protracted/extended litigation.
Authentic /correct interpretation of law
Clarity on classification issues
Can seek guidance before commencement of business or entering into a new
venture.
Facilitates contractual obligations by proper drafting of agreements at initial
stage itself
Avoids disputes between venture partners
Helps in cost and price determination including participation in global and
domestic tenders.
Who can seek advance ruling [section 95 (c)] ?

• A person registered under GST

• A person who wants to take registration

• Registration at the time of application is not required

• Applicant should be a person [2(84)]

• Recipient cannot take advance ruling

 AAR and Application for AR: Section 96-97
Authority for advance ruling constituted under the provisions of a SGST or UTGST shall be deemed to be the
Authority for advance ruling in respect of that State or Union territory.
Applicant - make an application + fee as prescribed + question on which the advance ruling is sought.
Question can be any of following:
(a) classification of any goods or services or both;
(b) applicability of a notification issued under the provisions of this Act;
(c) determination of time and value of supply of goods or services or both;
(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 or services or both;
(f) whether applicant is required to be registered;
(g) 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.
Note: Question on determination of place of supply cannot be raised
 Procedure on receipt of application: Section 98
Application received: Authority forward copy to concerned officer and, if necessary, call for relevant records: Provided
records shall be returned to the said concerned officer as soon as possible
The Authority after examining application and records and after hearing the applicant or his authorized representative:
Admit or reject the application (by order)
Provided: No application to be entertained on already pending matters

Provided further: No application to be rejected without giving an opportunity of being heard

Provided also: application of rejection must be accompanied with reason for the same
Copy of Order- of rejection/ acceptance of application shall be sent to applicant and to the concerned officer.
If application is admitted- Authority shall, after examining material placed before it and after providing an opportunity
of being heard to applicant pronounce its advance ruling on the question in application.
If members of the Authority differ on any question: A reference shall be made to Appellate Authority
Advance ruling to be pronounce by AAR within ninety days from the date of receipt of application.
A copy of the advance ruling pronounced signed by members and certified shall be sent to the applicant, the
concerned officer and the jurisdictional officer after such pronouncement.
Appeal to Appellate Authority: Section
99-100
Appellate Authority for Advance Ruling constituted under the provisions of a SGST Act or UTGST
Tax Act shall be deemed to be the Appellate Authority in respect of that State or Union territory.
Who may proceed for appeal:
- Concerned officer
- Jurisdictional officer or
- An applicant
aggrieved by any advance ruling pronounced may appeal to the Appellate Authority
Time Period: Within thirty days from the date of communication of pronouncement
Appellate Authority may allow appeal beyond specified time (extension allowed for thirty days)
Orders of Appellate Authority: Section 101

Appellate Authority may, after giving the parties an opportunity of being heard: Pass order
confirming or modifying the
Time Limit: The order shall be passed within a period of ninety days from the date of filing of the
appeal
If members of the Appellate Authority differ on any point or points: No advance ruling can be
issued in respect of such questions
A signed and certified copy to be given to the applicant, the concerned officer, the jurisdictional
officer and to the Authority after such pronouncement.
Rectification of advance ruling: Section 102
The Authority or the Appellate Authority may amend any order passed by it, so as to rectify any
error apparent on the face of the record: Suo-moto or brought into its notice by the concerned
officer, the jurisdictional officer, the applicant or the appellant within a period of six months
from the date of the order
Provided: No rectification if it has effect of enhancing the tax liability or reducing the amount of
admissible input tax credit shall be made unless the applicant or the appellant has been given an
opportunity of being heard.
Applicability of advance ruling: Section 103
Advance ruling pronounced by the Authority or the Appellate Authority shall be binding only—
(a) on the applicant
(b) on the concerned officer or the jurisdictional officer
The advance ruling shall be binding unless the law, facts or circumstances supporting the original
advance ruling have changed.
Advance ruling to be void in certain
circumstances: Section 104
If Authority or the Appellate Authority finds that advance ruling pronounced
- has been obtained by the applicant or the appellant by fraud or suppression of material facts or
- misrepresentation of facts,
it may, by order, declare such ruling to be void ab-initio
Provided: Opportunity of being heard to be given to the applicant or the appellant.
Powers of Authority and Appellate Authority: Section 105
Authority or the Appellate Authority shall have following powers
(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,
(d) all the powers of a civil court under the CPC, 1908.
The Authority or the Appellate Authority shall be deemed to be a
Civil court: For the purposes of section 195 (Prosecution for contempt of lawful authority of public servants, for offences against
public justice and for offences relating to documents given in evidence)
Not a civil court: For the purposes of Chapter XXVI of the CrPC, 1973 (Provisions As To Offences Affecting The Administration Of
Justice Sec 34-352), and
Every proceeding before the Authority or the Appellate Authority: Shall be deemed to be a judicial proceedings.

Procedure of Authority and Appellate Authority: Section 106

The Authority or the Appellate Authority shall, subject to the provisions of this Chapter, have power to regulate its own
procedure.
In Re: Fermi Solar Farms (P.) Ltd(2018)
93 [Link] 96 (AAR-Maharashtra)
Facts:
Applicant sought advance ruling where:
separate contracts made for supply of goods and services for a solar power plant
goods (solar power generating system) taxable @ 5 per cent and services at 18 per cent,
separately.
Ruling:
The said supply shall be treated as works contract service and shall be taxable @ 18%.
Being unsatisfied with the ruling, applicant applied to AAAR
 AAAR Ruling
• The AAAR confirmed the AAR ruling

• The agreements for setting up and operation of a solar photovoltaic plant are in nature of a
‘works contract’ in terms of clause (119) of section 2 of the GST Act.

• Schedule II [Activities to be treated as supply of goods or supply of services] treats ‘works

contracts’ under section 2(119) as supply of ‘services’.

• Rate of tax would be 18 % under the IGST Act and

• 9 % CGST and 9% MGST aggregating to 18 per cent of CGST and MGST

In Re: Simple Rajendra Shukla (2018)
93 [Link] 97 (AAR- Maharashtra)
Facts:
Applicant involved in providing services of tutions to students of class XI th & XII th science.
Ruling:
Applicant runs an institute which is not covered under definition of ‘Educational Institution’ .
Services provided by applicant does not covered under Exemption Notification No. 12/2017-
Central Tax (Rate) dated 28.06.2017
Therefore, the said service shall be taxable @18%.
In Re: Ernakulam Medical Centre Pvt. Ltd. (2018)
98 [Link] 161 (AAR, Kerala)
Facts
The applicant was rendering medical services through professional like doctors, nurses, staff etc,
including supply of medicines.
It assumed that medicines supplied through pharmacy to in-patients and out-patients under the
prescription of doctors are incidental to the health care services rendered by hospital and hence
not taxable i.e. exempt from GST.
Applied for advance ruling on the GST liability of hospital on the supplies of medicines and allied
items to patients through pharmacy

+
Ruling
•Supply of medicines and allied items by hospitals through pharmacy to in-patients, being a part of
‘composite supply’ of health care treatment, is exempt from tax

•In case of ‘in-patient’ supplies, hospital is expected to provide lodging, care, medicine and food as
part of treatment under supervision till discharge from hospital and also have strict restrictions to
ensure the quality/ quantity of items for consumption

•In case of ‘out-patients’, hospital provides only the prescription and patients have absolute freedom
to follow the prescription or not and to procure medicines either from pharmacy run by hospital or
from medicine dispensing outlets. These are taxable supplies.
Thank You
Anti-Profiteering
Rules
SECTION 171
Background
The GST Council announced the anti-profiteering rules on 18th June 2016.
Inflation and prices escalation in other countries:
After GST implementation in many other countries price of goods and services increased. For
example, Singapore saw a hike in inflation when it introduced GST in 1994.
Anti-profiteering measures were thus required at the retail level to protect consumers from
price swindling
Section 171 was inserted in the CGST Act which provides that it is mandatory to pass on the
benefit due to the reduction in the rate of tax or from input tax credit to the consumer by way of
commensurate reduction in prices.
Section 171
Reduction of Tax Rate in New Tax Regime
For example, eating at restaurants has become cheaper under GST (mostly 18% GST (now 5%) as compared to earlier 20.5%). This
benefit must be passed on to the consumers.
Passing of benefit due to reduction of tax rate, in case of supplies exclusive of tax or for immediate services is not a big challenge.
This is because the reduction in tax rate will directly be evidenced by invoices, and the recipient will get benefit of the rate reduction.
However, in case where contract of supplies is inclusive of taxes, this provision will cast responsibility on the supplier to reduce the
price due to reduction in rate of taxes.
For example, FMCG items are normally sold on MRP basis or some other fixed prices by retailers. If there is any reduction in rate of tax
it has to be passed on to the ultimate recipient. Accordingly, there will be a need to revise MRP or other prices fixed for such supplies.
However, if GST has a negative impact on the cost, then prices can be increased. For example: If the output supply was zero-rated in
previous regime and also remains zero-rated in GST regime, the business will not get any input tax credit.
If the tax rates are increased, tax under reverse charge imposed etc. then prices will increase.
For example, domestic LPG was exempt from tax under earlier regime. Now they fall under 5% GST. This will result in an increase in the
prices of cooking gas.
Benefit of Input Tax Credit
Almost all industries will be affected with respect to passing of benefit due to better credit
chain. In most places, be it service sector, manufacturing, trading, or any specific industry, all are
going to get advantage of better flow of input tax credit except sectors having zero-rated output
supply. So overall the expectations of anti-profiteering provisions are commensurate reduction
in prices of supplies.
For example, radio taxis earlier could not adjust the input VAT on office supplies with the output
service tax payable. Now, ITC on all inputs can be adjusted against output tax. These benefits are
passed on by them in the form of offers and discounts. Similarly, many big stores have GST sales
and special offers to pass on the benefit.

The Rules for Anti Profiteering are contained in Chapter XV (Rule Nos. 122 to
137) of the Central Goods and Services Tax Rules, 2017.
Anti-Profiteering practices : Abroad
• Many countries like Australia, Malaysia, Singapore, Austria, New Zealand,
Russia, Canada and China have already introduced the GST.
• Australia was the first country to have Anti-Profiteering provisions (Australian
Competition and Consumer Commission) in 2000
 Price monitoring for 12 months before GST
 Focus on consumer and business education
 Publication of price guidelines
 Inflation rose from 1.9% to 5.8% in first year
The Authority
• To be administered by Central Government
• By new authority, National Anti-profiteering Authority (NAA already constituted)
The Authority shall consist of-
(a) a Chairman
(b) 4 Technical Members (Commissioners of State/Central tax)
Duties of the Authority–
Determine whether the reduction in tax rate or the benefit of input tax credit has been passed on by the
seller to the buyer by reducing the prices.
Identify the taxpayer who has not passed on the benefit
The Authority will exist for 2 years from the date on which the Chairman enters upon his office unless the
Council recommends otherwise.
Orders Passed by the Authority
The Authority will order-
◦ Reduction in prices
◦ Return to the buyer, the benefit amount not passed on along with 18% interest
◦ Payment of penalty and
◦ Cancellation of registration

The Authority will pass an order within 3 months from the date of the receipt of the report from the Director-
General of Safeguards.
An opportunity of being heard will be given if the interested parties request for it in writing.
Period of interest will be calculated from the date of collection of higher amount till the date of return of such
amount.
If the eligible person (i.e. the buyer) does not claim the return or the person is unidentifiable then the amount
must be deposited to the Fund. Interest will be calculated from the date collection of higher amount till the
date it is deposited in the Fund.
Constitution of the Standing
Committee and Screening Committees
The Council will constitute a Standing Committee and a state-level Screening Committee on Anti-
profiteering,
Standing Committee will comprise of officers of the State and Central Government as nominated
by it.
The State level Screening Committee will be established in each State. It will consist of-
1 officer of the State Government, nominated by the Commissioner and
1 officer of the Central Government nominated by the Chief Commissioner.
Ways to file complaint
The aggrieved consumer or recipient can register his complaint by
Online complaint at [Link]
E-mail to [Link]@[Link] or [Link]@[Link]
Complaint sent by post to-
•National Anti-profiteering Authority
•Standing Committee, Directorate General of Anti-profiteering
Prominent Names / Brands
under NAA Lens
•Nestle India

•Hindustan Unilever

•Jubilant Food Works (Dominos)

•Himalaya Drugs

•Hard Castle Restaurants (Mc Donald’s )

•Puri Constructions

•Life Style International

Anti-profiteering Test in India
Gate Basmati Rice
Allegation:

Benefit of reduction in rate of tax on rice not passed on to consumers as MRP of

‘India Gate Basmati Rice’ had increased leading to increase in profit margin.
 
August 2017 Rs. 540 MRP (10 kg pack)
October 2017 Rs. 585 MRP (10 kg pack)
Company was able to prove
•Price of basmati rice did not solely depend upon tax structure

•There were other market driven forces such as seasonal crop, paddy price,
labour cost etc affecting cost and pricing e.g. price of raw paddy increased by
30% in 2017 over 2016 (Rs. 260 per 10 kg in 2016, Rs. 330 per 10 kg in 2017)
whereas output price went up by only 8%

•ITC availed was not enough to set off output tax liability

•There was no reduction in rate of tax on any supply