Advance Ruling under GST
- 2. Disclaimer 2 The information cited in this presentation has been drawn from various sources (including study material prepared by The Institute of Cost Accountants of India and The Institute of Chartered Accountants of India). While every efforts have been made to keep the information in this presentation error free, no responsibility for any typographical or clerical error which may have crept in while compiling the information provided can be taken. The presentation has been prepared to provide an overview of the applicable law pertaining to the subject matter. For detailed insight and for better understanding, its is advised to refer to relevant provisions in the Act and the related rules & notifications.
- 3. What is Advance Ruling? 3 • “Any advise, information or undertaking provided by a tax authority to a specific tax payer or a group of tax payers concerning their tax situation and on which they are entitled to rely” – as per OECD Report, 2004 • It is a written interpretation of tax laws, issued by tax authorities upon request, on clarification of certain tax matters. It is often requested when the taxpayer is confused and uncertain about certain provisions. • Advance Ruling provisions are there both under Direct Tax laws and Indirect Taxes laws (pre-GST and GST era). • Advance ruling can be obtained for a proposed transaction as well as a transaction already undertaken by the appellant. The effect, however, is prospective in nature.
- 4. Some terminologies 4 • “Advance ruling” means a decision provided by the Authority or the Appellate Authority to an applicant on matters or on questions specified in Sec 97(2) or Sec 100(1) of the Act, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. Sec 95(a) of CGST Act • “Authority” means the Authority for Advance Ruling referred to in Section 96 of the Act. Sec 95(e) of CGST Act • “Appellate Authority” means the Appellate Authority for Advance Ruling referred to in section 99 of the Act. Sec 95(b) of CGST Act • “Applicant” means any person registered or desirous of obtaining registration under the Act. Sec 95(c) of CGST Act • “Application” means an application made to the Authority under Section 97(1) of the Act. Sec 95(d) of CGST Act
- 5. Advance Ruling 5 • U/s 97(2) of CGST Act, Advance Ruling can be sought for the following questions: • Classification of goods or services or both • Applicability of a Notification issued under the 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 tax liability to pay tax on any goods or services or both; • Clarification on registration requirements of the applicant • whether any particular thing done by the applicant amounts to or results in a supply of goods or services or both.
- 6. Probable questions - Advance Ruling 6 Classification of goods or services or both • Determining the nature of supply – goods/ services/ Composite supply/ Mixed supply/ Works contract? • Impact of wrong classification • Pre-GST classification & Post-GST Classification issues Applicability of a Notification • Impact of each Notification • Granting exemption from registration • Conditional waiver of taxes/ reduced taxes • Date of applicability of each notification & its effect on compliance
- 7. Probable questions - Advance Ruling 7 Determination of time and value of supply of goods or services or both • Identifying the time of supply – inherent conflicts in recording of transactions in the books of accounts • Identifying the supplies on which tax liability arises under reverse charge u/s 9(3) and u/s 9(4) • Evaluating the parties involved – related or unrelated person, distinct person • Determining whether price would be the sole consideration for supply • Ascertaining Value of Supply as per Sec 15 of CGST Act or applicability of Chapter IV of CGST Rules
- 8. Probable questions - Advance Ruling 8 Admissibility of Input Tax Credit of tax paid or deemed to have been paid • Identifying eligibility of ITC based on Registration • Identifying eligibility of ITC based on Supply • Blocked Credit/ Proportionate Credit/ Reversal of Credit • Impact of Notification on ITC eligibility • Correlation with pricing & Anti-Profiteering provisions
- 9. Probable questions - Advance Ruling 9 Determination of tax liability to pay tax on any goods or services or both • Ascertaining Tax Liability based on Registration • Time of Supply/ Value of Supply • Eligibility of ITC to be adjusted against tax liability Clarification on registration requirements of the applicant • Registration requirement – Chapter VI of CGST Act • Exemptions from taking registration, which were subsequently notified • Issues related to Casual Taxable Person/ Non-Resident Taxable Person • Compliances based on type of Registration
- 10. Authority for Advance Ruling 10 • The Authority for Advance Ruling (AAR) constituted under the provisions of a State Goods and Services Tax Act or Union Territory Goods and Services Tax Act shall be deemed to be the Authority for advance ruling in respect of that State or Union territory. Sec 96 of CGST Act • The Government shall appoint officers not below the rank of Joint Commissioner as member of the Authority for Advance Ruling. Rule 103 of CGST Rules
- 11. Procedure for Advance Ruling – Sec 98 11 Application in form GST ARA-01 along with docs and fee of Rs. 5,000 per Act Authority forwards application to the concerned and calls for info/ records Authority, after examining, accepts or rejects the application and issue an Order In case application is accepted, further info/ records are examined Advance Ruling is pronounced within 90 days from receipt of application Copy of the Ruling is sent to the applicant and the concerned officer(s)
- 12. Ground rules 12 • 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 the Act. 1st proviso to Sec 98(2) of CGST Act • No application shall be rejected unless an opportunity of hearing has been given to the applicant. 2nd proviso to Sec 98(2) of CGST Act • Where the application is rejected, the reasons for such rejection shall be specified in the order. 3rd proviso to Sec 98(2) of CGST Act • 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. Sec 98(5) of CGST Act
- 13. Appeal to the Appellate Authority 13 • The concerned officer(s) or the applicant, aggrieved by any advance ruling by AAR, may appeal to the Appellate Authority for Advance Ruling (AAAR). Sec 100(1) of CGST Act • Appeal to be filed within a period of 30 days from the date on which the ruling sought to be appealed against is communicated. Sec 100(2) of CGST Act • Appellate Authority may extend the 30 days period by another period not exceeding 30 days in case of any sufficient cause preventing the appellant to act. Proviso to Sec 100(2) of CGST Act. • Appeal to be filed by • Applicant - In form GST ARA-02 accompanied by fee of Rs. 10,000 per Act • Department – In form GST ARA-03 (without any fee)
- 14. Appeal to Appellate Authority 14 • Order confirming or modifying the ruling appealed against or referred to shall be passed within 90 days from the date of filing of the appeal or a reference to the deadlock at the AAR level. Sec 101(2) of CGST Act • Where the members of the Appellate Authority differ on any point or points 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. Sec 101(3) of CGST Act • A copy of the advance ruling pronounced by the Appellate Authority duly signed by the Members shall be sent to the applicant, the concerned officer(s) and to the Authority after such pronouncement. Sec 101(4) of CGST Act
- 15. National Appellate Authority – Sec 101A 15 • To be constituted on the recommendations of the Council. • National Appellate Authority shall consist of • A President, who has been a Judge of the Supreme Court or is or has been the Chief Justice of a High Court, or is or has been a Judge of a High Court for a period not less than 5 years, • Technical Member (Centre) who is or has been a member of Indian Revenue (Customs and Central Excise) Service, Group A, and has completed at least 15 years of service in Group A. • Technical Member (State) who is or has been an officer of the State Government not below the rank of Additional Commissioner of VAT or the Additional Commissioner of State tax with at least 3 years of experience in the administration of an existing law or the State GST Act or in the field of finance and taxation. • The President shall be appointed by the Government after consultation with the Chief Justice of India or his nominee. • The Technical Member (Centre) and Technical Member (State) shall be appointed by the Government on the recommendations of a Selection Committee consisting of such persons and in such manner as may be prescribed. Proposed as part of Finance (No. 2) Act, 2019
- 16. National Appellate Authority – Sec 101A 16 • The President shall hold office for a term of 3 years from the date on which he enters upon his office, or until he attains the age of 70 years, whichever is earlier and shall also be eligible for reappointment. • The Technical Member(s) shall hold office for a term of 5 years from the date on which he enters upon his office, or until he attains the age of 65 years, whichever is earlier and shall also be eligible for reappointment. • Subject to the provisions of Article 220 of the Constitution, the President or the members, on ceasing to hold their office, shall not be eligible to appear, act or plead before the National Appellate Authority where he was the President or, as the case may be, a Member. Proposed as part of Finance (No. 2) Act, 2019
- 17. Appeal before NAAAR – Sec 101B 17 • Where conflicting Advance Rulings are given by the AAAR of two or more States or Union territories, or where Advance Rulings couldn’t be obtained due to difference of opinion, any officer from the concerned State, authorised by the Commissioner, or an applicant may prefer an appeal to National Appellate Authority. • Appeal to be filed • In case of taxpayer, within 30 days from the date on which the ruling sought to be appealed against is communicated to the applicants or the concerned officer(s). • In case of department, within 90 days from the date on which the ruling has been communicated. • The NAAAR may extend the timeline by another 30 days. Proposed as part of Finance (No. 2) Act, 2019
- 18. Order of the NAAAR – Sec 101C 18 • National Appellate Authority, after giving an opportunity to be heard, shall pass such order as it thinks fit, confirming or modifying the rulings appealed against. • If the members of the National Appellate Authority differ in opinion on any point, it shall be decided according to the opinion of the majority. • The order shall be passed, as far as possible, within 90 days from the date of filing of the appeal. • Copy of the Advance Ruling pronounced by the National Appellate Authority shall be sent to the applicant, the authorised officer(s), the Board, the Chief Commissioner and to the Authority or Appellate Authority, as the case may be. Proposed as part of Finance (No. 2) Act, 2019
- 19. Rectification of Advance Ruling 19 • The Authority, the Appellate Authority or the National Appellate Authority may amend any order passed by it, so as to rectify any error apparent on the face of the record. Such amendment can be done on its own accord, or if brought to notice by the concerned officer(s) or the applicant within a period of 6 months from the date of the order. Sec 102 of CGST Act • No rectification, which has the effect of enhancing the tax liability or reducing admissible input tax credit shall be made unless the applicant or the appellant has been given an opportunity of being heard. Proviso to Sec 102 of CGST Act Item in Blue proposed as part of Finance (No. 2) Act, 2019
- 20. Applicability of Advance Ruling 20 • U/s 103(1) of CGST Act, the advance ruling pronounced by the Authority or the Appellate Authority shall be binding only • On the applicant who had sought it in respect of any matter referred to for advance ruling • On the concerned officer or the jurisdictional officer in respect of the applicant. • U/s 103(1A) of CGST Act, The Advance Ruling pronounced by National Appellate Authority shall be binding on • the applicant who sought the Advance Ruling, and all registered persons under the same PAN number. • the concerned officers and the jurisdictional officers in respect of the said applicant(s) • Where the Authority, the Appellate Authority or the National 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. Sec 104(1) of CGST Act • No order shall be passed unless an opportunity of being heard has been given to the applicant or the appellant. Proviso to Sec 104(1) of CGST Act Item in Blue proposed as part of Finance (No. 2) Act, 2019
- 21. Powers of the Authority 21 • For the purpose of exercising its powers regarding • discovery and inspection • enforcing the attendance of any person and examining him on oath • issuing commissions and compelling production of books of account and other records, the Authority, Appellate Authority or the National Appellate Authority shall have all the powers of a civil court under the Code of Civil Procedure, 1908. Sec 105(1) of CGST Act • The Authority, the Appellate Authority or the National Appellate Authority shall be deemed to be a civil court and every proceeding before the Authority, the Appellate Authority or the National Appellate Authority shall be deemed to be a judicial proceedings. Sec 105(2) of CGST Act • The Authority, the Appellate Authority or the National Appellate Authority shall, subject to the provisions of the Act, have power to regulate its own procedure. Sec 106 of CGST Act Item in Blue proposed as part of Finance (No. 2) Act, 2019
- 22. Thank You Manmohan Daga Daga & Associates 9804199500 mmdaga@hotmail.com