It is a good time to note, that appealing against the advance ruling is a new provision in GST. The previous tax regime did not have any scope for appeal against Advance Ruling at all, and the only way to contest the ruling was by going through the Division Bench of the High Court. However, this process has been made easy by the introduction of an appeal mechanism to the Appellate Authority for Advance Ruling under GST – which we will understand in this blog.

Appellate Authority for Advance Ruling Process

The following are the various provisions laid down pertaining to the procedure for advance ruling by the Appellate Authority for Advance Ruling, under GST:

Initiation of Advance Ruling Procedure by AAAR

  • The initiation of the appeal to Appellate Authority for Advance Ruling can be made by the applicant or the officer who is aggrieved by any advance ruling
  • Appeal against the advance ruling of the AAR, must be made within 30 days from the date of the advance ruling issued by the AAR. However, this limit is extendable by 30 days.

Advance Ruling Forms by AAAR

  • The application for appealing against the advance ruling of the AAR, has to be made in Form GST ARA-02, along with the payment of fees of INR 10,000
  • If the appeal is made by a GST tax officer, then Form GST ARA-03 needs to be filed. However, no fees will be applicable in this case.

Advance Ruling Purview by AAAR

The AAAR can, by order, either confirm or modify the advance ruling issued by the AAR, which is appealed against. However, if the members of the AAAR, differ in opinion on any point, then an advance ruling cannot be issued.

Post the decision of the AAAR, a copy of the advance ruling signed by the members will be sent to the applicant, the prescribed or the jurisdictional CGST / SGST officer and to the initial authority that passed the Advance Ruling i.e. the AAR.

Advance Ruling Time Limit by AAAR

An advance ruling decision by the AAAR will be given within 90 days from the date of the application.

Rectification of the Advance Ruling by AAAR

The AAAR can amend its own order to rectify any apparent mistake, if the same is noticed within 6 months from the date of the original order. The rectification of the order can be done by:

  • AAAR on its own
  • Prescribed or the Jurisdictional CGST / SGCT officer
  • Applicant

However, it is to be noted that any rectification which may result in increase in tax liability or decrease in input tax credit, will be allowed only after giving a notice and an opportunity to be heard to the applicant.

Scope of the Advance Ruling by AAAR

The advance ruling decision by the Appellate Authority for Advance Ruling will be binding only on the following entities:

  • Applicant
  • Jurisdictional Tax Authorities in respect of the Applicant

However, if the law or the facts of the original advance ruling change, then the advance ruling issued by the AAAR will not apply.

Nullification of the Advance Ruling by AAAR

If it is discovered, that the appellant has obtained the advance ruling by fraud or suppression of material facts, then the Authority for Advance Ruling (AAR) or the Appellate Authority for Advance Ruling (AAAR) will declare the ruling to be void ab initio (from the beginning). All the provisions of GST, will then be applicable to the applicant as normal without any advance ruling – however, an opportunity of being heard will be given to the applicant, in such as case, post which advance ruling nullification may take place.

In conclusion, it can be said that the provisions of advance ruling under GST are bound to make life simpler for a taxable person who wants to gain clarity on the tax arrangements to be made for a particular transaction. However, the only area where currently a clarity is not available is – that there is no defined level of appeal beyond the 2nd level i.e. the Appellate Authority for Advance ruling. However, it may be expected that the process to appeal further should be similar to that in the previous tax system, and a taxable person who is not satisfied with the decision of the AAAR, may appeal against it, via a special dispensation to the Division Bench of the High Court.