ADVANCE RULING UNDER MODEL GST LAW

[Mr. M. GOVINDARAJAN]

Advance Ruling

Section 94(a) of Model Goods and Services Tax Act, 2016 (‘Act’ for short) defines the term ‘Advance Ruling’ as a written decision provided by the Authority (the Authority for Advance Ruling) or, as the case may be, the Appellate Authority to an applicant on matters or on questions in relation to supply of goods and/or services proposed to be undertaken or being undertaken by the applicant.

Question on which Advance Ruling is sought

Section 97(2) provides the list of questions on which the advance ruling sought as detailed below-

• Classification of any goods and/or services under the Act;
• Applicability of a notification issued under provisions of the Act having a bearing on the rate of tax;
• The principles to be adopted for the purposes of determination of value of the goods and/or services under the provisions of the Act;
• Admissibility of input tax credit of tax paid or deemed to have been paid;
• Determination of the liability to pay tax on any goods and/or services under the Act;
• Whether the applicant is required to be registered under the Act;
• Whether any particular thing done by the applicant with respect to any goods and/or services amounts to or results in a supply of goods and/or services, within the meaning of that term.

Objective of advance ruling

The broad objective for setting up such an authority is to-

• provide certainty in tax liability in advance in relation to an activity proposed to be undertaken by the applicant;
• attract FDI;
• reduce litigation;
• pronounce ruling expeditiously in transparent and inexpensive manner

Authority for advance ruling

Section 95 provides that the Authority for advance ruling shall be located in each State.  The Authority shall comprise-

• one member from CGST; and
• one member from SGST

to be appointed respectively by the Central Government and the State Government.  The educational qualifications, eligibility conditions, method and the process of appointment of the members shall be prescribed the rules.

Appellate Authority

Section 96 provides that the constitution of Appellate Authority which is the salient feature of the Model GST Law.  The Appellate Authority shall hear appeal against the order of the Authority for Advance Ruling.  The Appellate Authority shall comprise –

• The Chief Commissioner of CGST as designated by the Board; and
• The Commissioner of SGST having jurisdiction over the applicant.

Procedure

The Act provides the following procedure in getting advance ruling from the Authority-

• An applicant desirous of obtaining an advance ruling may make an application in such form and in such manner as may be prescribed, stating the question on which the advance ruling is sought;
• On receipt of the application, the Authority shall send a copy to the Officers as may be prescribedand if necessary call upon him to furnish the relevant records;
• Where any records have been called for by the Authority shall be returned as soon as practicable;
• Then the Authority shall examine the application;
• The Authority may call for records, if required;
• The applicant or authorized representative of the applicant may be given an hearing in this regard;
• The Authority, by order, shall admit or reject the application;
• The Authority shall not admit the applicant where the question raise in the application is-

• Already pending in the applicant’s case before any First Appellate Authority, the Appellate Tribunal or any Court;
• The same as in a matter already decided by the First Appellate Authority, the Appellate Tribunal or any Court;
• The same as in a manner already pending in any proceedings in the applicant’s case under any of the provisions of the Act;
• The same in a matter in the applicant’s case already decided by the adjudicating authority or assessing authority, whichever is applicable;

• No application shall be rejected unless the opportunity has been given to the applicant of being heard;
• If the application is rejected the Authority shall give reasons for such rejection in the order;
• A copy of the order as above shall be sent to the applicant and to the prescribed officers;
• If the application is admitted, the Authority shall, after examining such further material as may be placed before it by the applicant or obtained by theAuthority and after giving an opportunity of being heard to the parties concerned, pronounce its advance ruling on the question specified in the application;
• The Authority have power to regulate its own procedure in all matters arising out of the exercise of the powers under the Act;
• The Authority shall have the powers of a Civil Court under CPC 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;
• If the members of the Authority differ on any question 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;
• The Authorityor the Appellate Authority shall pronounce its advance ruling within 90 days of the receipt of the application;
• Where the members of the Appellate Authority differ on any point or points referred to above it shall be deemed that no advance ruling can be issued in respect of the question covered by the reference application;
• A copy of the advance ruling duly signed by the Members and certified in the prescribed manner shall be sent to the applicant and the jurisdictional CGST/SGST officer.

Appeal

Section 99 provides that-

• the prescribed or jurisdictional CGST/SGST officer; or
• an applicant

aggrieved by any advance ruling may file appeal to the Appellate Authority.  The appeal shall be filed before the Authority within 90 days from the date on which the ruling is communicated to the concerned party.   The appeal shall be filed in the prescribed form and verified in the prescribed manner.

The Appellate authority may, after giving the parties, an opportunity of being heard, pass such order as it thins fit, confirming or modifying the ruling appealed against.  The order shall be passed within a period of 90 days from the date of filing.  The Appellate Authority has power to regulate its own procedure in all matters arising out of the exercise of the powers under the Act.  The Appellate Authority shall have the powers of a Civil Court under CPC 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;

Where the members of the Appellate Authority differ on any point or points referred to in the appeal, it shall be deemed that no advance ruling can be issued in respect of the question covered under the appeal.  A copy of the advance ruling made by the Appellate Authority signed by the Members and certified in the prescribed manner shall be sent to the applicant, the prescribed or the jurisdiction CGST/SGST officer and to the Authority.

Rectification

Section 101 provides for the procedure for rectification of advance ruling.  The Authority or the Appellate Authority may amend any order passed by it so as to rectify any mistake apparent from the record, if such mistake is noticed by the Authority or the Appellate Authority on its own accord, or is brought to the notice by the prescribed or jurisdictional CGST/SGST officer or the applicant.  The rectification can be done within a period of 6 months from the date of order.

No rectification which has the effect of enhancing the tax liability or reducing the amount of admissible input tax credit shall be made unless the Authority or the Appellate Authority has given notice to the applicant or the appellant of its intention to do so and has allowed him a reasonable opportunity.

Binding  of Advance Ruling

Section 102 provides that 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 in the application for advance ruling;
• jurisdictional tax authorities in respect of the applicant.

Time of applicability

The advance ruling shall be binding unless the law, facts or circumstances supporting the original advance ruling have changed.

Advance ruling when to be void

Section 103 provides that where the Authority or the Appellate Authority finds that the advance ruling 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.  All the provisions of the Act shall apply, excluding the period beginning with the date of such advance ruling and ending with the date of order, to the applicant as if such advance ruling had never been made.  Such order shall be passed only after giving an opportunity to the applicant of being heard.  A copy of the said order shall be sent to the applicant and the prescribed officers.