What is meant by Advance ruling?
An advance ruling, especially in the context of GST (Goods and Services Tax), is a formal interpretation of tax laws provided in writing by the Authority for Advance Rulings (AAR).
This authoritative body addresses queries from taxpayers seeking clarity on specific tax-related matters before initiating planned activities.
The process involves submitting questions related to GST advance rulings, and the authority of advance rulings offers written explanations to resolve uncertainties.
This mechanism ensures that businesses can gain insights into the GST implications of their actions and decisions before implementation, contributing to better compliance and understanding of the tax framework.
What are the benefits of advance rulings?
Obtaining an advance ruling offers several advantages to the applicant, particularly in the context of GST (Goods and Services Tax).
It enables effective planning of activities subject to GST well in advance. The ruling, issued by the Authority for Advance Ruling (AAR), establishes certainty regarding tax liabilities, and its binding nature applies to both the applicant and government authorities.
This not only aids in avoiding prolonged and costly legal disputes but also ensures a straightforward and economical process.
Seeking an advance ruling is a cost-effective and efficient procedure, providing clarity and transparency to taxpayers on potential issues that could lead to disagreements with tax administration.
Who gives the ruling for advance ruling application?
A binding ruling is provided by the legally constituted body known as the Authority for Advance Ruling (AAR).
Who can apply for advance ruling under GST?
Any individual registered under GST or seeking registration can apply for an advance ruling.
Is advance ruling binding on the applicant?
Yes, the advance ruling is binding on the applicant and extends to the concerned or jurisdictional officer overseeing the applicant’s case.
Can advance ruling be challenged?
Indeed, an advance ruling can be challenged by filing an appeal with the Appellate authorities of the state, specifically the Appellate Authority for Advance Ruling (AAAR).
What are the matters on which advance ruling can be sought?
As per section 97(2) of the CGST Act, 2017, the question on which the advance ruling is sought under this Act, shall be in respect of-
(a) Classification of any goods or services or both.
(b) Applicability of a notification issued under the provisions of this Act.
© 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 the 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.
How to apply for an advance ruling?
Application for Advance ruling has to be made in FORM GST ARA-01 along with a fee of Rs. 5,000.
Will the application be always accepted?
No, the Authority has the discretion to reject an application under the following circumstances:
(a) The same matter has already been decided in an earlier case for the applicant.
(b) The same matter is already pending in any proceedings for the applicant.
Applications will be rejected only after given an opportunity to be heard. Reasons for rejection shall be given in writing.
Conclusion
Advance rulings from the Authority for Advance Rulings (AAR) offer businesses valuable insights before undertaking activities.
These rulings, binding for both applicants and authorities, ensure clarity, effective planning, and streamlined processes.
Despite its benefits, the AAR retains discretion in accepting applications, contributing to a transparent and informed GST landscape.
