Advance Authority under Goods and Service Tax
Introduction : In many case it is possible that assessee is not been able to determine whether the notification prescribed is applicable or not or whether the rate of tax applied by him is correct or not whether exemption provide by government is applicable or not and there are many questions which arises in mind of taxpayer for which he needs an opinion at current stage to avoid levy of interest and penalty at later stage. Therefore, to avoid all this government has come with concept of Advance Authority Ruling whereby ruling that is guidance/judgment will be provided in advance, which will help the assessee to undertake the transaction.
What is Advance Authority Ruling?
Advance ruling is written interpretation of law, which is provided by tax authorities for the requested matters by assessee. For obtaining Advance authority ruling assessee will be required to furnish the specified form along with requisite documents and fees.
Whether Advance Authority Ruling is binding on all the assessee?
No. Ruling obtained is only binding on the assessee who has sort the ruling.
Illustration : Mr. J is confused that whether their product will be taxable or not; to avoid the confusion he decided to opt for Advance Authority Ruling. One of his business partners has decided to apply such ruling in his personal entity. Determine whether he can do so?
In such case ruling is only binding on assessee who has sort the ruling i.e. it is not applicable to any other assessee. As ruling has been obtained by partnership firm it cannot be applied by partner in his proprietary concern; Therefore, contention of business partner is not valid.
Illustration : Mr. P is confused that whether their product will be taxable at 5% or at 18%; to avoid the confusion he decided to opt for Advance Authority Ruling. He is engaged in inter-state supply Determine whether he can do so?
It has been provided that if the person has sort for the ruling from one state authority than that will not be binding on other state authority. Therefore, the person will be required to obtain advance authority ruling from the other state authority also. The contention of Mr. P is not valid.
What are the matters for which ruling can be sort by the assessee?
Which form is required to filled and what is the fees to paid for obtaining Advance Authority Ruling? Whether such fees are refundable?
Assessee is required to furnish ARA-01 for obtaining Advance Authority Ruling and along with this he is required to pay Rs. 5,000/- as fees which will be non-refundable.
Whether Decision of Advance Authority Ruling is Binding and Non-Challengeable?
Decision are required to be pronounced by authority within 90 days from date of receipt of application and decision given by Advance Authority Ruling is binding in nature. The ruling pronounced by Advance Ruling Authority is challengeable by the assessee to Appellate Authority for Advance Ruling.
What is time limit for aggrieved party for challenging decision of Advance Authority Ruling?
Assessee aggrieved by the decision of Advance Authority Ruling can file appeal to Appellate Authority for Advance Ruling within 30 days from date of order of Advance Ruling Authority in form ARA-02 with fees of Rs. 10,000/-. If department is aggrieved by the order of then proper officer can file appeal in form ARA-03 and no fees shall be required to be furnished by him.
In such cases Appellate Authority for Advance Ruling shall be made within 90 days from date of filling the appeal.
Whether ruling pronounced once can be rectified?
Both the above authority can amend its order if there is error apparent on record but it shall be noted that no order can be passed unless opportunity of been heard has been given to assessee in case were such rectification has effect of increasing liability or decreasing Input Tax Credit.
What are the cases where application for Advance Ruling will not be accepted?
The application will not be accepted when
- The same matter has already been decided in earlier case for same applicant.
- The same matter is already pending in any proceeding of the assessee.
Whether application for advance ruling can be rejected?
For the above stated matters or if application is incomplete; then it can be rejected but in that case opportunity of being is to be provided to assessee. Also, reasons for such rejection shall be recorded in writing.
Illustration : Mr. Raja wants to obtain advance ruling as he is not able to determine place of supply and therefore, he has applied for the same. Assessing officer rejected the application on the ground that the said matter is not one of the specified matters for which Advance Ruling can be pronounced. Whether the contention of assessing officer is valid?
In the given case contention of assessing officer is valid as determination of place of supply is not one of the specified matters and therefore application in respect of said cannot be made. However, it is advisable that in such cases assessee shall apply as if he is not been able to determine his tax liability then in such case assessing officer cannot deny the application further as ruling pronounced by one state is not binding on another state, in case of inter-state supply assessee will be required to obtain ruling from both the contracting states.