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Margesh Rai
| Updated: 29 Jun, 2020 | Category: Goods and Service Tax

Synopsis of the Entire Mechanism of Advance Ruling under GST

Advance Ruling under GST

Advance ruling under GST refers to a written opinion or administrative decision furnished by India’s tax authorities to individuals or corporations who seek clarification concerning some tax-related matters. When taxpayers are unaware of specific tax-related provisions and don’t find answers to their queries concerning the same aspect, an advance ruling request is made.

In other words, an advance ruling under GST is concerned with the decisions that Appellate Authority or the leading authority for clarifying the queries and doubts of corporations and individuals. In the former Indirect Tax law, acquiring an advance ruling facility was only for the non-residents, and afterward, it became applicable for Indian taxpayers. Moreover, we can say that the provisions and laws concerning advance ruling were applicable for the proposed activity, and no applicability was there in case of activity in progress.

All the applicants can be on the lookout for advance ruling on the present, as well as the activities that get proposed. (AAR)Authority of Advance Ruling is responsible for granting the advance ruling, appealable before AAAR, i.e., Appellate Authority for Advance Ruling. An applicant can plan his activities liable for GST payment with the help of the Authority of Advance Ruling (AAR). It adds the certainty factor to tax liability ascertainment.

Under an income tax, the availability of advance ruling is in case of international taxation. With the help of this, non-residents can eliminate highly charged legal conflicts, determine the income tax liability, and draft a plan concerning income tax in advance.

Applicability of Advance Ruling under GST

One can seek advance ruling under GST in various matters. If any taxpayer is not certain about the provisions and laws, he/she can go ahead for demanding advance ruling.

The applicability of advance tax ruling is on-

  • Whether the applicant needs to get registered under goods and service tax
  • Whether ITC paid or deemed to get paid will be getting the permission.
  • Classification of all goods and services (Or goods/services) under the Act
  • Determination of time along with the value of goods or services supply
  • Liability ascertainment to tax payment on any goods or services
  • Notification that can affect the tax rate
  • Whether the applicant has done anything with respect to goods or services will eventually occur in a supply.

Note– Prior to the initiation of the proposed activity, the advance tax ruling gets applied.  

How is Advance Ruling under GST Beneficial?

An advance ruling under GST is advantageous is due to the following reasons mentioned below in the point forms-

  • It eliminates or minimizes pricey legal disputes and thereby brings a reduction in the judicial proceedings.
  • It brings certainty in the matter of tax liability determination in advance in connection with the future activities and operations that the applicant will be commencing.
  • It conserves time and reasonably serves decisions and, at the same time, maintains the transparency factor.
  • Advance ruling under GST pulls FDI (expanded as Foreign Direct Investment) by making clarification with respect to the taxation and portraying a clear crystal view of the tax liability concerning the future of the Foreign Direct Investment. Since most of the non-residents want to stay away from the disordered tax disputes, the clear taxation will draw the attention of non-residents.

On Whom the Advance Ruling under GST is Applicable?

The applicability of the advance ruling is only on the jurisdictional tax authorities[1] with regard to the applicant, and also it will be binding on the applicant. There are no rules concerning the applicability of advance ruling in case of the changes in the facts and laws of the advance ruling that is an original one.

Read our article:GST: Penalty, Offences and Appeals Under GST Act 2017

The course of Action Associated with Receipt of Application

Upon receipt of an application, the forwarding of a copy will take place into the hands of the prescribed officer. Furthermore, the prescribed officer will fulfill its responsibility of supplying the mandatory in-use records.

Proceeding of Advance Ruling under GST Regime

  • The process of advance ruling under the GST regime initiates with sending the advance ruling to AAR, i.e., Authority for Advance Ruling. If any individual/person is not satisfied with the advance ruling has the right to make an appeal to the Appellate Authority for Advance Ruling (Commonly referred to as AAAR).
  • In FORM GST ARA-01, application for an advance ruling may get made accompanied by the amount of Rs. 5000.
  • The final decision of the authority will be valuable in this regard as it has the power to admit or even reject the application.
Proceeding of Advance Ruling under GST Regime

Cases in which the authority won’t Give Acceptance to the application

The designated authority will not allow the applications in two cases-

  • In case when the same matter in any of the previous proceedings for the applicant.
  • In an earlier case, when the same issue has been decided for the applicant.

It’s a basic rule that there is no scope for advance ruling under GST in previously taken decisions or even in any cases that are pending. After providing an opportunity, an application would go through the rejection process. In written form, the prime reasons behind the rejection need to get delivered.

Appeal Made to the Appellate Authority

An applicant can make an appeal to the Appellate Authority in case if he gets discontented by the advance ruling under GST. Let’s understand it in a simple way.

  • If an applicant is in a state of confusion regarding the tax provisions applicability, he can go on applying for Advance Ruling.
  • In case if the applicant feels happy with the decisions, the advance ruling will be applicable to him. On the other hand, if he is not pleased with the decision, he can utilize his right to appeal to the Appellate Authority for Advance Ruling (AAAR).

What is the Time Limit for Authority to Give Advance Ruling Decision?

  • The time limit set for the authority to provide advance ruling decision is 90 days from the application.
  • There will be a prospective effect of advance ruling.
  • If authority members share divergent opinions at any point in the proceedings, the issue will be referred to the Appellate Authority for higher scrutiny.

Conclusion

In order to get clarification on the matters concerning taxation, an application can go ahead for making an application to AAR (The Authority for Advance Rulings). Advance rulings under GST are binding decisions. As it helps in avoiding costly litigation and the process of seeking advance ruling is simple, taxpayers have started banking upon it. We, at Corpbiz, would assist you in getting the GST registration and make you take the privileges of advance ruling under GST.

Read our article:Detailed Analysis of Reverse Charge Mechanism under GST

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Margesh Rai

Being a poetry lover, and an avid reader, Margesh is fanatical about legal content writing. After completing graduation in B.Com(H), he decided to follow his passion. Writing impeccable in-depth content about legal and finance-related topics is his biggest forte.

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