NATIONAL APPELLATE AUTHORITY FOR ADVANCE RULING

[Mr. M. GOVINDARAJAN]

Introduction

Chapter VII of the Central Goods and Services Tax Act, 2017 provides the provisions for getting Advance Ruling.  The GST Council proposed the creation of a centralized appellate authority in its meeting dated 22 December 2018.  The authority will provide advance rulings to deal with cases of conflicting decisions on the same issue by two or more state appellate advance ruling authorities.  The Financial (No.2) Bill, 2019 (‘Bill’ for short) proposed to make amendments to Chapter VII to some extent for the constitution of National Appellate Authority for Advance Rulings (‘NAA’ for short).

Advance Ruling

Clause 103(i) of the Bill brings amendments to the definition of ‘Advance Ruling’.  After this amendment the expression ‘Advance Ruling’ is defined as a decision provided by the Authority or the Appellate Authority or the National Appellate Authority to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub-section (1) of section 100 or of section 101 (c) in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.

National Appellate Authority

Clause 103(ii) of the Bill inserts a new clause (f) to section 95, for the definition for the expression ‘National Appellate Authority’.  According to this new clause the NAA means   the National Appellate Authority for Advance Ruling referred to in section 101A.”.

Constitution of NAA

Clause 104 proposed to insert a new section 101A which provides for the constitution of NAA.  New section 101A (1) provides that The Government shall, on the recommendations of the Council, by notification, constitute, with effect from such date as may be specified therein, an Authority known as the ‘National Appellate Authority for Advance Ruling’  for hearing appeals made under section 101B.

Section 101A(2) provides that the National Appellate Authority shall consist of-

• the 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 five years;
• a 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 fifteen years of service in Group A;
• a Technical Member (State) who is or has been an officer of the State Government not below the rank of Additional Commissioner of Value Added Tax or the Additional Commissioner of State tax with at least three years of experience in the administration of an existing law or the State Goods and Services Tax Act or in the field of finance and taxation.

Appointment

• The President of the National Appellate Authority shall be appointed by the Government after consultation with the Chief Justice of India or his nominee.  In the event of the occurrence of any vacancy in the office of the President by reason of his death, resignation or otherwise, the senior most Member of the NAA shall act as the President until the date on which a new President, appointed in accordance with the provisions of this Act to fill such vacancy, enters upon his office.  Where the President is unable to discharge his functions owing to absence, illness or any other cause, the senior most Member of the NAA shall discharge the functions of the President until the date on which the President resumes his duties.
• The Technical Member (Centre) and Technical Member (State) of the NAA 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.
• No appointment of the Members of the NAA shall be invalid merely by the reason of any vacancy or defect in the constitution of the Selection Committee.
• Before appointing any person as the President or Members of the NAA the Government shall satisfy itself that such person does not have any financial or other interests which are likely to prejudicially affect his functions as such President or Member.

Salary and allowances

• The salary, allowances and other terms and conditions of service of the President and the Members of the NAA shall be such as may be prescribed.  Neither salary and allowances nor other terms and conditions of service of the President or Members of the NAA shall be varied to their disadvantage after their appointment.

Tenure

• The President of the NAA shall hold office for a term of three years from the date on which he enters upon his office, or until he attains the age of seventy years, whichever is earlier and shall also be eligible for reappointment.
• The Technical Member (Centre) or Technical Member (State) of the NAA shall hold office for a term of five years from the date on which he enters upon his office, or until he attains the age of sixty-five years, whichever is earlier and shall also be eligible for reappointment.

Resignation

• The President or any Member may, by notice in writing under his hand addressed to the Government, resign from his office.   The President or Member shall continue to hold office until the expiry of three months from the date of receipt of such notice by the Government, or until a person duly appointed as his successor enters upon his office or until the expiry of his term of office, whichever is the earliest.

Removal

• The Government may, after consultation with the Chief Justice of India, remove from the office such President or Member, who-

1. has been adjudged an insolvent; or
2. has been convicted of an offence which, in the opinion of such Government involves moral turpitude; or
3. has become physically or mentally incapable of acting as such President or Member; or
4. has acquired such financial or other interest as is likely to affect prejudicially his functions as such President or Member; or
5. has acquired such financial or other interest as is likely to affect prejudicially his functions as such President or Member; or
6. has so abused his position as to render his continuance in office prejudicial to the public interest.

• The President or the Member shall not be removed on any of the grounds specified in clauses (d) and (e), unless he has been informed of the charges against him and has been given an opportunity of being heard.
• The President and Technical Members of the NAA shall not be removed from their office except by an order made by the Government on the ground of proven misbehaviour or incapacity after an inquiry made by a Judge of the Supreme Court nominated by the Chief Justice of India on a reference made to him by the Government and such President or Member had been given an opportunity of being heard.
• The Government, with the concurrence of the Chief Justice of India, may suspend from office, the President or Technical Members of the NAA in respect of whom a reference has been made to the Judge of the Supreme Court.

Restrictions

• Subject to the provisions of article 220 of the Constitution, the President or Members of the NAA, on ceasing to hold their office, shall not be eligible to appear, act or plead before the NAA where he was the President or, as the case may be, a Member.

Appeal to NAA

The procedure involving in filing appeal before the NAA is discussed as below-

• Where, in respect of the questions referred to in section 97(2), conflicting advance rulings are given by the Appellate Authorities of two or more States or Union territories or both, any officer authorized by the Commissioner or an applicant, being distinct person referred to in section 25 aggrieved by such advance ruling, may prefer an appeal to NAA.
• The officer shall be from the States in which such advance rulings have been given.
• The appeal shall be filed within a period of 30 days from the date on which the ruling sought to be appealed against is communicated to the applicants, concerned officers and jurisdictional officers.
• The officer authorized by the Commissioner may file appeal within a period of 90 days from the date on which the ruling sought to be appealed against is communicated to the concerned officer or the jurisdictional officer.
•  The NAA may, if it is satisfied that the appellant was prevented by a sufficient cause from presenting the appeal within the said period of thirty days, or as the case may be, ninety days, allow such appeal to be presented within a further period not exceeding thirty days.
• The period of thirty days or as the case may be, ninety days shall be counted from the date of communication of the last of the conflicting rulings sought to be appealed against.
• The appeal shall be in such form, accompanied by such fee and verified in such manner as may be prescribed.
• The NAA may, after giving an opportunity of being heard to the applicant, the officer authorized by the Commissioner, all Principal Chief Commissioners, Chief Commissioners of Central tax and Chief Commissioner and Commissioner of State tax of all States and Chief Commissioner and Commissioner of Union territory tax of all Union territories, pass such order as it thinks fit, confirming or modifying the rulings appealed against.
• If the members of the NAA 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 a period of 90 days from the date of filing of the appeal.
• A copy of the advance ruling pronounced by the NAA shall be duly signed by the Members and certified in such manner as may be prescribed and shall be sent to the applicant, the officer authorized by the Commissioner, the Board, the Chief Commissioner and Commissioner of State tax of all States and Chief Commissioner and Commissioner of Union territory tax of all Union territories and to the Authority or Appellate Authority, as the case may be, after such pronouncement.

Rectification

The NAA may amend any order passed by it so as to rectify any error apparent on the face of the record, if such error is noticed by the NAA on its own accord, or is brought to its notice by the concerned officer, the jurisdictional officer, the applicant or the appellant within a period of 6 months from the date of the 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 applicant or the appellant has been given an opportunity of being heard.

Applicability of Ruling by NAA

The advance ruling pronounced by the NAA shall be binding on-

• the applicants, being distinct persons, who had sought the ruling  and all registered persons having the same Permanent Account Number issued under the Income-tax Act, 1961;
•  the concerned officers and the jurisdictional officers in respect of the applicants referred to in clause (a) and the registered persons having the same Permanent Account Number issued under the Income-tax Act, 1961;

Advance Ruling to be void

Where the NAA finds that advance ruling pronounced by it 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 and thereupon all the provisions of this Act or the rules made there under shall apply to the applicant or the appellant as if such advance ruling had never been made.   A copy of the order made shall be sent to the applicant, the concerned officer and the jurisdictional officer.

Powers of NAA

The NAA shall, 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,

have all the powers of a civil court under the Code of Civil Procedure, 1908.

Judicial proceedings

The NAA shall be deemed to be a civil court for the purposes of section 195, but not for the purposes of Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974), and every proceeding before the Authority or the Appellate Authority shall be deemed to be a judicial proceedings within the meaning of sections 193 and 228, and for the purpose of section 196 of the Indian Penal Code.