Authority For Advance Ruling (AAR) Under GST

An advance tax ruling is an order passed by the authority for advance ruling (AAR) or Appellate Authority for Advance Ruling (AAAR) that helps the taxpayers to understand certain tax provisions better.

What Are Authority For Advance Ruling (AAR) And Appellate Authority For Advance Ruling (AAAR)?

Authority for Advance Ruling (AAR) is a body constituted legally that can order an advance ruling to an applicant. However, any advance ruling passed by AAR can be appealed before an AAAR (Appellate Authority for Advance Ruling).

AAR and AAR both are established under the advance ruling mechanism in GST. Moreover, both AAR and AAAR are only applicable within the jurisdiction of the concerned state or union territory as they are constituted under State/UT Act and not Central Act.

What Are The Objectives Of Advance Ruling?

The objectives of the Advance ruling are:

1. To assess tax liability in advance, before it is assessed by the applicant.
2. Reduction of litigation chances.
3. To attract FDIs.
4. Articulate ruling quickly and easily.

Who Can Seek Advance Ruling?

The following people are eligible to seek an Advance Ruling with the AAR:

1. A person holding a valid Importer- Exporter Code (IEC) granted u/s 7 of the Foreign Trade Act, 1992.
2. A person exporting any goods or services to India.
3. Any other person who has applied for advance ruling.

What Are The Powers Of AAR Under GST?

Here is the list of powers of AAR under GST:

1. The AAR can hear and settle on all applications and petitions. 
2. In case of any trouble emerges in giving a decision, the AAR may eliminate such issue by passing an order as deemed fit, within 3 months of noticing such issue.
3. Before passing an advance ruling, the AAR can resume the hearing about the case if they find an adequate reason to do so. 
4. The AAR may direct the assessment of records or reports before passing an advance ruling on the case.

Other Powers Of AAR

The AAR has all the powers of a civil court under the Code of Civil Procedure, 1908, with respect to the accompanying: 

1. Inspection and Discovery.
2. Compel attendance of any individual and Interrogating them on oath.
3. Assessment of books of record and other related records. 

Appeal Against The Order Of AAR

As per Section 99 of the CGST Act, 2017, the applicant or the concerned official, aggrieved by any advance ruling passed by the AAR, may appeal to the Appellate Authority for Advance Ruling (AAAR). 

1. The appeal needs to be filed within 30 days from the day the ruling is passed by the AAR.
2. If the AAAR has adequate reason to accept that the aggrieved party was kept from filing the appeal within the prescribed time, an extra period not surpassing 30 days might be given to the said party.
3. The AAAR, after providing the reasonable opportunity to be heard to the parties involved, will pass an order within 90 days from the date of filing the appeal.
4. In case if there is any dissent between the AAAR members, it will be considered that no advance ruling is issued against the issue raised under the order.
5. The applicant, concerned official, jurisdictional official, and AAR members will receive a signed copy of the advance ruling after the ruling is passed by the AAAR.

Conclusion

To conclude, AAR and AAAR were established to ensure that disputes are minimal. The main aim is to assure the taxpayers concerning the obligations under the GST Act. Moreover, to bridge the gap between the taxpayer and tax authorities to smoothen the GST process by avoiding unnecessary litigations.

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