GST: Govt to bring Centralized Authority for Advance Rulings

Advance Rulings - GST

Considering the frequency of orders passed by the Advance Ruling Authorities ( AAR ) of different States and the confusions made by them over the applicability of tax under the GST regime, the Central Government is planning to establish a centralized Authority for Advance Rulings.

“We are looking at an issue-based central authority with officials from states and the Centre,” a top government official told ET. “If more than one appeal is filed on the same issue in different jurisdictions it can be taken up by this body.”

An advance ruling helps the applicant in planning his activities which are liable for payment of GST in advance. It also brings certainty in determining the tax liability, as the ruling given by the Authority for Advance Ruling is binding on the applicant as well as Government authorities. It also helps in avoiding long drawn and expensive litigation at a later date. Seeking an advance ruling is inexpensive and the procedure is simple and expeditious. It thus provides certainty and transparency to a taxpayer with respect to an issue which may potentially cause a dispute with the tax administration. A legally constituted body called Authority for Advance Ruling (AAR) can give a binding ruling to an applicant who is a registered taxable person or is liable to be registered. The advance ruling given by the Authority can be appealed before an Appellate authority for Advance Ruling (AAAR).

An advance ruling pronounced by AAR or AAAR shall be binding only on the applicant and on the concerned officer or the jurisdictional officer in respect of the applicant. This clearly means that an advance ruling is not applicable to similarly placed other taxable persons in the State. It is only limited to the person who has applied for an advance ruling.

Recently, the AARs constituted by Kerala, Gujarat, Karnataka, Delhi etc had created an ambiguity over the applicability of GST on various items.

The rulings by the AAR are case-specific, but they have a persuasive impact on tax assessment in cases of other firms under similar circumstances.

“AAR decisions are specific to the case, but they do have some precedence value,” the official said. The previous indirect tax regime had a centralized body ensuring consistency in orders.

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