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CA Final · Indirect Tax Laws · Advance Ruling

An advance ruling was pronounced in favour of Ganga Polymers Ltd on the rate of tax applicable to a product. A year later, a notification changed the rate applicable to that product. Ganga Polymers continues to rely on the ruling. Based on the CGST Act, 2017, which is correct?

The ruling binds only until the law, facts or circumstances supporting it change. Since the rate changed through a notification, the legal basis of the ruling has changed and Ganga Polymers can no longer rely on it as binding.

  1. AThe ruling remains binding indefinitely because it was pronounced under the Act
  2. BThe ruling is binding only so long as the law, facts or circumstances supporting it have not changed, so it no longer binds after the rate changeCorrect
  3. CThe ruling stays binding on the applicant but ceases to bind the officer
  4. DThe ruling becomes binding on all registered persons dealing in that product

Explanation

Section 103(2) provides that the advance ruling is binding unless the law, facts or circumstances supporting the original ruling have changed. A change in the rate notification is a change in law. Option 3 is wrong because binding effect under section 103(1) is on both the applicant and the concerned or jurisdictional officer, and the ruling does not extend to all persons.

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