Navigating Appeals for Advance Rulings under GST
This article explains the process for appealing advance rulings under India's Goods and Services Tax (GST) framework. It details who can file an appeal, the required forms, and the timeline for decisions by the Appellate Authority. The piece also covers how rulings can be amended or declared void, the powers of the authorities involved, and the potential for further recourse against adverse decisions, highlighting the evolving nature of advance rulings within the new GST regime.
This article delves into the process of appealing advance rulings under GST, building upon prior discussions regarding the fundamentals of advance rulings and the Authority for Advance Ruling (AAR).
Recent Updates
February 1, 2021
As per the Union Budget 2021, a 25% penalty payment is required for appealing orders related to the detention and seizure of goods and conveyances under Section 107 of the CGST Act. The effective date for this provision remains pending.
April 3, 2020
The deadline for various compliances and appeals, including those to the appellate authority under GST law, the High Court, or the Supreme Court, was extended to June 30, 2020. This extension applied to deadlines falling between March 20, 2020, and June 29, 2020, covering both the filing and processing of appeals.
Novel Provision within GST Framework
The Goods and Services Tax (GST) system introduces a novel provision allowing appeals against advance rulings. Previously, under the old tax regulations, there was no direct tribunal appeal for advance rulings; challenges could only be made via a special provision to the High Court's Division Bench. The GST framework simplifies this by enabling appeals directly to the Appellate Authority.
Appealing to the Appellate Authority for Advance Ruling under GST
Advance Ruling Appeal Procedure
Either the applicant or a tax officer who is dissatisfied with an advance ruling may file an appeal with the Appellate Authority. Such appeals must be submitted within 30 days from the date the advance ruling was issued, with a possible extension of an additional 30 days.
Required Forms
Applicants filing an appeal against an advance ruling must use FORM GST ARA-02 and incur a fee of Rs. 10,000. Conversely, a GST tax officer initiating an appeal should submit FORM GST ARA-03, for which no fee is required.
Appellate Authority's Decision
The Appellate Authority holds the power to either uphold or revise the challenged ruling. A decision is typically rendered within 90 days of receiving the appeal application. If the Appellate Authority's members cannot reach a consensus on any aspect, an advance ruling cannot be issued. The applicant, the relevant jurisdictional CGST / SGST officer, and the Authority will each receive a copy of the final ruling, duly signed by the members.
Amending Advance Rulings
Both the original Authority and the Appellate Authority are authorized to amend their orders to correct any evident errors. This rectification can occur within six months from the order's date, initiated either proactively by the Authority, by the designated jurisdictional CGST / SGST officer, or by the applicant. Any correction that would lead to an increased tax liability or a reduction in input tax credit—meaning a detrimental impact—will only be carried out after providing proper notice and allowing the applicant an opportunity to be heard.
Scope of Advance Ruling Applicability
An advance ruling is only binding on the specific applicant and the relevant jurisdictional tax authorities concerning that applicant. Should there be changes in the underlying law or factual circumstances that formed the basis of the original advance ruling, the ruling will no longer be applicable.
Nullification of Advance Rulings
An advance ruling can be declared void ab initio (from the beginning) by either the Authority or the Appellate Authority if it was obtained through fraudulent means or by concealing essential facts. In such instances, all standard GST provisions will apply to the applicant as if no advance ruling had ever existed. Before such a declaration, the applicant will be granted an opportunity to present their case.
Powers Vested in Authorities
Both the Authority and the Appellate Authority are endowed with powers akin to a civil court under the Code of Civil Procedure. These powers enable them to conduct discovery and inspection, compel individuals to appear and testify under oath, and perform investigations while enforcing the production of relevant documents. Every proceeding conducted by these Authorities is considered a judicial proceeding.
Procedural Autonomy of Authorities
The Authority and the Appellate Authority possess the autonomy to establish their own procedures for all matters stemming from the exercise of their designated powers.
Recourse Against Appellate Authority Decisions
The GST Act does not explicitly outline a process for further appeals against the Appellate Authority's decision. Consequently, the approach is anticipated to mirror the former tax system, where an individual could appeal the Appellate Authority's ruling through a special dispensation to the High Court's Division Bench, as established by the Supreme Court in the Colombia Sportswear company vs. Director of Income Tax, Bangalore-2012 case.
Conclusion
Historically, prior tax laws allowed reliance on established legal precedents. With the advent of GST, a new tax regime, individuals must structure their tax affairs for specific transactions at their own risk, often seeking guidance through advance tax rulings. However, advance rulings under GST could potentially broaden the interpretative scope for particular issues.
Discrepancies may arise if various jurisdictional tax authorities offer differing interpretations on the same matter, thereby preventing a conclusive advance ruling and undermining its core objective. The absence of previous case law means interpretations remain fluid, possibly leading to an increase in appeals and subsequent legislative adjustments, thus diminishing the intended benefits of advance rulings. The actual effectiveness of advance rulings in minimizing GST-related legal disputes remains to be observed.