Appeal to Appellate Authority for Advance Ruling under GST

In our previous article on advance ruling, we discussed the basics of advance rulings and the Authority for Advance Ruling. In this article, we will continue with appeal to the Appellate Authority and other aspects of advance ruling.

Latest Updates

1st February 2021
Union Budget 2021: With respect to orders received on detention and seizure of goods and conveyance, 25% of the penalty needs to be paid for making an application of appeals under section 107 of the CGST Act. The date of applicability is yet to be notified.

3rd April 2020
The time limit for completion or compliance has been extended to 30th June 2020, where the time limit/ date of expiry falls between the period from 20th March 2020 to 29th June 2020. It includes the time limit to file an appeal before the appellate authority under the GST law or the High Court or the Supreme Court including the admission and processing of the appeal.

A new concept under GST 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 to any tribunal. It could be only appealed against through a special dispensation to Division Bench of the High Court. This process has been made easy by allowing appeal to the Appellate Authority under GST.

Appeal to the Appellate Authority for Advance Ruling under GST

Process of Advance Ruling under GST

Who can appeal against the advance ruling? The applicant or the officer aggrieved by any advance ruling can appeal to the Appellate Authority.

What is the time limit for appeal? Appeal against advance ruling must be made within 30 days (extendable by 30 days) from the date of the advance ruling.

Forms

• If the applicant is appealing against the decision of the advance ruling then he will apply in FORM GST ARA-02 and pay Rs. 10,000 fees.
• If the appeal is made by a GST tax officer, then the applicable form is FORM GST ARA-03. No fee is applicable.

Decision of the Appellate Authority

The Appellate Authority can confirm or modify the ruling appealed against. Appellate Authority will give its decision within 90 days from application. If the members of the Appellate Authority differ in opinion on any point, then advance ruling cannot be issued.  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 Authority.

Rectification of Advance Ruling

The Authority or the Appellate Authority can amend its own order to rectify any apparent mistake if it is noticed within 6 months from the date of the order by –

• The Authority or the Appellate Authority on its own or
• By the prescribed or the jurisdictional CGST / SGST officer or
• The applicant

Any rectification which will result in increase in tax liability or decrease in input tax credit (i.e., a negative impact) will be done only after giving notice and an opportunity of being heard to the applicant.

Applicability of Advance Ruling

The advance ruling will be binding only – (a) On the applicant  (b) On the jurisdictional tax authorities in respect of the applicant.   If the law or the facts of the original advance ruling change then the advance ruling will not apply.

Can the Advance Ruling become void?

If the appellant has obtained the advance ruling by fraud or suppression of material facts, then the Authority or the Appellate Authority will declare the ruling to be void ab initio. All the provisions of GST will apply to the applicant as normal without any advance ruling. An opportunity of being heard will be given to the applicant.

Powers of the Authority and Appellate Authority

The Authority or the Appellate Authority have all the powers of a civil court under the Code of Civil Procedure for the purposes of- (a) Discovery and inspection; (b) Enforcing the attendance of a person and questioning him on oath; (c) Investigations and enforcing production of books and other records, Every proceeding before the Authority or the Appellate Authority will be a deemed judicial proceeding.

Procedure of the Authority and the Appellate Authority

The Authority or the Appellate Authority have the power to regulate its own procedure in all matters arising out of the exercise of its powers.

What Happens if the Taxable Person is Unhappy with the Decision of the Appellate Authority?

GST Act does not specially mention the procedure for appealing against the Appellate Authority. So, it is expected to be similar to the previous tax system. The person can appeal against the Appellate Authority through a special dispensation to Division Bench of the High Court as decided by the Supreme Court in the case of Colombia Sportswear company vs. Director of Income Tax, Bangalore-2012.

Conclusion

In previous tax laws one could rely on an existing legal decision. However, GST being completely new, one can only take guidance as to how make tax arrangements for particular transactions at his own risk. This is where Advance Tax ruling can help. But Advance Ruling under GST can even increase the scope of interpretation for a particular issue.

Different jurisdictional tax authorities can give different interpretations to the same subject in case of dispute and then advance ruling will not be possible. It will defeat the purpose of advance ruling. As there are no earlier cases to base opinions on, the floor will be open to all interpretations. This may, in turn, bring in more appeals and legislation later on thus removing the very advantage of advance ruling.

We have to wait and watch as to how the advance ruling will help in reducing legal disputes in case of GST.