The Government of India after considering the complexity of tax systems introduced De jure forum to pronounce the Advance Ruling as In Personam Relief (i.e., Relief to specific person). Advance Ruling refers to the written response or decision by “Authority for Advance Ruling” (AAR) and “Appellate authority for Advance Ruling” (AAAR). It is a legal process which helps Suo Moto applicant in planning business activities which are liable for payment of GST or not, well in advance.
Objective:
- To provide indubitable tax liability in advance
- To attract FDI
- To Reduce Litigation
- To Pronounce ruling expeditiously in a transparent and inexpensive manner
Jurisdiction of AAR & AAAR
Unlike other forums, the ruling pronounced by the AAR & AAAR will be applicable only within the jurisdiction of the concerned state or union territory as it is constituted under the provisions of State Goods and Services Tax Act or Union Territory Goods and Services Tax Act and shall be deemed to be the Authority for advance ruling in respect of that State or Union territory under the CGST Act, 2017.
Powers of AAR & AAAR:
- The AAR and AAAR have the power to regulate their own procedure.
- Deemed to be Civil Court under Code of Civil Procedure, 1908 and Code of Criminal Procedure, 1973.
- Any proceeding before the authority shall be deemed to be judicial proceeding.
Though the forum has vest with the power of the Court and the proceedings are deemed to be judicial proceeding, the ruling pronounced by them does not have any precedent value as that of judgment pronounced by Supreme Court or High Court. Advance Ruling is mere like In Personam Relief as it is the proceeding in which relief is sought and is applicable only to the applicant applying for it, so it does not hold any persuasive value.
The Advance Ruling shall bind only:
- Applicant who sought for it
- Concerned Officer
- Jurisdictional Officer
It will not be applicable to the homogeneous tax persons in the State. It is only limited to the person who has applied for an advance ruling.
Key points in a Capsule:
- Questions or Appeal can be raised only u/s 97(2) or u/s 100(1) of CGST Act, 2017.
- Advance ruling can be obtained for a proposed transaction as well as a transaction already undertaken by the appellant.
- It shall bind till the period of the law, facts or circumstances supporting original advance ruling not changed or amended.
- Aggrieved applicant or concerned or jurisdictional officer shall file an appeal to AAAR.
- The Authority or the Appellate authority shall declare the ruling as void ab initio if the applicant has obtained the ruling by fraud or suppressing the material facts.
- Advance Ruling does not hold any Persuasive value even for similar tax persons in the State.
- It is not Judgment in Rem (Right against the world at large) but rather a Judgment in Personam i.ei.e., (binding on the applicant in respect of transaction to which ruling has been sought and on tax authorities), and not universally.
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✍Shivadharini. SNS
CAS – FCC Team
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