As per Section 95(1) “Advance Ruling” means a decision provided by the authority or the appellate authority to an applicant on the matters or on the question specified in sub-section (2) of section 97 or sub-section (1) of section 100 of the CGST Act, 2017, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.
Advance Ruling in GST provides certainty in circumstances wherein there exist some ambiguity in the interpretation of law. An Advance ruling helps the applicant in planning his activities which are liable for payment of GST, well in advance. It 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 GST authorities. Further it helps in reducing long drawn and expensive litigation at a later stage. It thus provides certainty and transparency to a taxpayer with respect to an issue which may potentially cause a dispute with the tax administration.
Applicability of advance ruling
❑ As per Section 103, an Advance ruling pronounced by AAR and AAAR shall be binding only on the applicant and on the concerned officer or the jurisdiction officer in respect of the applicant. Advance ruling is not applicable to the any other taxable person in the state. It is only limited to the person who has applied for an advance ruling.
❑ Where a recipient obtains a ruling on taxability of his inward supply of goods or services, supplier of such goods or services is not bound by the ruling and he is free to assess supply according to his own determination. [Erode Infrastructure Private Limited (AAAR – Tamil Nadu)]