CA Final · Indirect Tax Laws

Advance Ruling: formula sheet

Full chapter guide

Key formulas

Meaning of advance ruling (section 95): Advance ruling = decision of Authority / Appellate Authority → to an applicant → on questions in section 97(2) or 100(1) → about supply of goods/services/both being undertaken or proposed to be undertaken; Learn all four parts: who decides, who gets it, which questions, and the forward-looking supply.
Applicant (section 95): Applicant = a person registered under the Act OR desirous of obtaining registration; A person who has not yet registered but plans to can apply. A person with no plan to register cannot.
Questions for ruling (section 97(2)): (a) Classification of any goods or services or both; (b) Applicability of a notification issued under the provisions of the Act; (c) 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; Learn the items as listed in the section: classification, notification, time and value, ITC, liability, registration, supply. Check the current text of the section.
Bar on admission (proviso to section 98(2)): The Authority shall not admit the application where the question raised is already pending or decided in any proceedings in the case of the applicant under any provisions of the Act; This is the key limit on admission. Check it in every case scenario.
Composition of AAR (Rule 103): AAR = 1 central tax officer + 1 State/UT tax officer; Two members in total. One comes from each administration, designated by the Central Government and the State or UT Government respectively.
Appointing authority: Central member: Central Government; State/UT member: State/UT Government, respectively; Each government designates its own officer as a member.
Constitution and deeming: AAR constituted under the State/UT GST Act = AAR for the CGST Act; Section 96 deems the State/UT AAR to be the AAR for CGST purposes. Rule 103 provides the member composition. One AAR per State or Union territory.
Composition of AAAR (Rule 104): AAAR = Chief Commissioner of central tax (designated by the Board) + Commissioner of State/UT tax (designated by the State/UT Government); Confirm the exact wording in the latest ICAI material.
Difference of opinion: AAR members differ: refer to AAAR. AAAR members differ: no ruling.; Learn both outcomes. Examiners test the contrast.
Form of application: Online in FORM GST ARA-01 on the GST portal; Filed by a registered person or a person seeking registration, with the question and supporting facts and documents.
Fee: ₹5,000 under the CGST Act + ₹5,000 under the SGST Act = ₹10,000; For a Union territory the second ₹5,000 is under the UTGST Act. Remember it as two equal fees, one for each law.
Time limit for ruling: Ruling to be pronounced within 90 days of receipt of the application; Count from the date the Authority receives the application. The ruling is given after admission, examination and hearing.
Admit or reject: Not admitted if the question is already pending or decided in any proceedings in the applicant's case under the GST law; Rejection must be by a reasoned order after giving the applicant an opportunity of being heard.
Difference of opinion: Members differ → points referred to Appellate Authority → if it cannot decide, deemed that no advance ruling is issued; Applicable when the two members of the Authority do not agree.
Who can appeal (section 100): Applicant (if aggrieved) | Concerned officer | Jurisdictional officer; Appeal lies against a ruling pronounced under section 98(4). A person outside these three cannot appeal.
Time limit for appeal: 30 days from communication of the ruling; Count from the date the ruling is communicated to the applicant and the officers, not from the date of the hearing.
Condonation of delay: Further period ≤ 30 days, if sufficient cause is shown; Outer limit is 30 + 30 = 60 days from communication. The AAAR cannot go beyond it.
Form of appeal (Rule 106): Applicant: FORM GST ARA-02 | Officer: FORM GST ARA-03; Filed on the common portal with documents. The applicant's appeal carries the prescribed fee and gets a provisional acknowledgement.
Order of AAAR (section 101): Hearing → order confirming or modifying the ruling, within 90 days of filing the appeal; If the members differ on a point, it is deemed that no advance ruling can be issued on that question.
Rule 105: Copy of the advance ruling, duly signed by the members of the Authority and certified → provided to the applicant, concerned officer, jurisdictional officer and the other authority; Applies to rulings pronounced by the Authority for Advance Ruling. It is about communication of the ruling, not only proof of genuineness.
Rule 107: Copy of the order of the Appellate Authority, duly signed by the members of the Appellate Authority and certified → provided to the applicant, concerned officer, jurisdictional officer and the other authority; Applies to orders pronounced by the Appellate Authority. Do not confuse it with Rule 106, which relates to filing the appeal.
Binding effect (section 103): Binding on (a) the applicant, for the matter on which the ruling was sought, and (b) the concerned or jurisdictional officer, in respect of that applicant; Not binding on other taxpayers or other officers dealing with other persons.
Duration of binding force (section 103): Binding unless law, facts or circumstances supporting the original ruling have changed; A change in law or facts ends the protection.
Void ab initio (section 104): Ruling obtained by fraud / suppression of material facts / misrepresentation → the Authority or Appellate Authority that pronounced it may, by order under section 104(1) and after a hearing, declare it void from the start; The Act applies as if no ruling had been made. Under section 104(2), the period from the ruling to the voiding order is excluded only in computing the time limits under section 73(2) or 74(2) for issuing a show cause notice.

Quick revision

Advance ruling is a written decision on a question about a supply undertaken or proposed to be undertaken.
It is sought by a registered person or a person who wants to register.
Permitted questions include classification, rate notification applicability, time and value of supply, ITC admissibility, liability to pay tax, registration requirement and whether an activity is a supply.
The Authority is set up by the State or Union Territory Government and has one member from central tax and one from State or UT tax, appointed by the Central Government and the State or UT Government respectively.
The Appellate Authority is likewise constituted by the State or Union Territory Government. It is made up of the Chief Commissioner of central tax (as designated by the Board) and the Commissioner of State tax or UT tax having jurisdiction.
An application is not admitted if the same question is already pending or decided in the applicant's own proceedings.
The Authority must give its ruling within 90 days of receiving the application (s.98(6)).
If the members of the Authority differ, they state the point on which they differ and refer it to the Appellate Authority (s.98(5)).
If the members of the Appellate Authority differ on any point referred to in the appeal, it is deemed that no advance ruling can be issued on that point (s.101(2)).
An appeal against a ruling is made within 30 days of the date the ruling is communicated, and the Appellate Authority may allow a further period of up to 30 days if the delay is for sufficient cause.
The Appellate Authority must pass its order within 90 days of the appeal being filed (s.101(1)).
A ruling binds only the applicant and the concerned or jurisdictional officer in respect of the applicant.
It stays binding unless the law, facts or circumstances supporting it change.
A ruling is void from the start if obtained by fraud, suppression of facts or misrepresentation (s.104).
When a ruling is declared void, all provisions of the Act apply to the applicant as if the ruling had never been made. The period from the date of the ruling to the date of the order declaring it void is excluded when computing limitation under s.73 or s.74.

Common mistakes

Saying only a registered person can apply. Fix: Remember 'registered OR desirous of obtaining registration'. A new business that plans to register can apply.
Listing questions that are not in section 97(2), such as refund eligibility. Fix: The question must fall within the items (a) to (g) of section 97(2). If the issue, like a refund claim, does not fit any listed item, the Authority cannot rule on it.
Saying the AAR has three members or a judicial member Fix: Fix the number at two: one central tax officer and one State or Union territory tax officer.
Mixing up the members of the AAR and the AAAR Fix: The AAR has one central tax officer and one State or UT tax officer (Rule 103). The AAAR has the Chief Commissioner of central tax designated by the Board and the Commissioner of State or UT tax (Rule 104).
Stating the fee as ₹5,000 in total. Fix: Write ₹5,000 under CGST and ₹5,000 under SGST (UTGST for a Union territory), total ₹10,000.
Admitting an application even though a show cause notice on the same issue is already pending against the applicant. Fix: Always check whether the question is pending or decided in the applicant's own proceedings under the GST law. If so, it is not admitted.
Counting the 30 days from the date of the AAR hearing or the date of the order. Fix: Always start from the date the ruling is communicated. Write this phrase in your answer.
Saying the AAAR can condone any length of delay. Fix: Remember 30 + 30. The extra time cannot exceed 30 days, and sufficient cause must be shown.
Saying an advance ruling binds all taxpayers dealing in the same goods or services. Fix: Remember section 103: only the applicant and the concerned or jurisdictional officer in respect of that applicant are bound.
Mixing up Rule 105 and Rule 107, or citing Rule 106 for communication of the ruling. Fix: Link 105 to the Authority and 107 to the Appellate Authority. Rule 106 is about filing the appeal.

Exam tips

For case-scenario MCQs, run the three gates: person, question, pending. Most options are wrong because of one gate.
Learn the questions listed in section 97(2) as a list. A question that asks 'on which matter can a ruling be sought' is usually a direct test of this list.
Quote the definition in two parts: the applicant and the forward-looking supply. Examiners reward both.
Write written answers in provision-facts-conclusion form and state the section number only where you are sure: sections 95 and 97(2), and the proviso to section 98(2), are safe.
Link scope to effect: a ruling is binding on the applicant and the jurisdictional officer for that supply, so mention it briefly.
Write the composition in one line: two members, one central tax and one State or Union territory tax, designated by the Central Government and the State or UT Government respectively.
In comparison questions, set out AAR and AAAR side by side: composition, who designates, and result of disagreement.
In case scenarios, check that both administrations are represented and that each member comes from the right side before concluding.