The GST Council has asked the Centre and states to expedite setting up of appellate authorities for aggrieved entities to appeal against orders of the Authority for Advance Rulings (AAR).
With AARs in different states started giving rulings since March, it has become imperative for the Centre as well as states to set up the Appellate Authority for Advance Ruling (AAAR), an official said.
With AARs in different states started giving rulings since March, it has become imperative for the Centre as well as states to set up the appellate authority for an advance ruling (AAAR). So far only 12 states, including West Bengal, Gujarat, Madhya Pradesh, Rajasthan, Tamil Nadu and Uttar Pradesh, have issued notifications for setting up AAARs. However, these have not become operational as the members have not yet been appointed.
As per the state GST law, the appellate authority will have two members – the chief commissioner of central tax as designated by CBIC and the commissioner of state tax.
The appellate authority has been mandated to pass the order within 90 days of the filing of the appeal.
Under the GST (goods and services tax) law, an aggrieved party can file an appeal against the order of the authority for advance rulings within 30 days, which may be further extended by a month.
“Advance ruling” means a decision provided by the Authority or the Appellate Authority to an applicant on matters or on questions specified in sub-section (2) of section 97 or subsection (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.
Objectives for setting up a mechanism of Advance Ruling are:
- Provide certainty in tax liability in advance in relation to an activity proposed to be undertaken by the applicant.
- Attract Foreign Direct Investment (FDI).
- Reduce litigation.
- Pronounce ruling expeditiously in a transparent and inexpensive manner.
‘Authority for advance ruling’ (AAR) and ‘Appellate authority for advance ruling’ (AAAR):
The Authority for advance ruling constituted under the provisions of State Goods and Services Tax Act or Union Territory Goods and Services Tax Act shall be deemed to be the Authority for advance ruling in respect of that State or Union territory under the CGST Act, 2017 also.
The Appellate Authority for Advance Ruling constituted under the provisions of a State Goods and Services Tax Act or a Union Territory Goods and Services Tax Act shall be deemed to be the Appellate Authority in respect of that State or Union territory under the CGST Act, 2017 also.
Thus it can be seen that both the Authority for Advance Ruling (AAR) & the Appellate Authority for Advance Ruling (AAAR) is constituted under the respective State/Union Territory Act and not the Central Act. This would mean that the ruling given by the AAR & AAAR will be applicable only within the jurisdiction of the concerned state or union territory. It is also for this reason that questions on the determination of the place of supply cannot be raised with the AAR or AAAR.
Before giving the ruling, AAR must hear the applicant or his authorized representative as well as the jurisdictional officers of CGST/SGST.
If there is a difference of opinion between the two members of AAR, they shall refer the point or points on which they differ to the AAAR for hearing the issue. If the members of AAAR are also unable to come to a common conclusion in regard to the point(s) referred to them by AAR, then it shall be deemed that no advance ruling can be given in respect of the question on which difference persists at the level of AAAR.