Appellate Authority of Advance Ruling

In a move to facilitate foreign investment ventures in India through simplified customs procedures, the Authority for Advance Ruling (AAR) was introduced through a provision in the Finance Act of 1999. The AAR provides rulings on customs, central excise, and service tax matters.  

Now, the Goods and Services Tax (GST) Council has put forth a new provision, the Appellate Authority for Advance Ruling (AAAR) to allow taxpayers to appeal rulings by the AAR.

Any taxpayer who files an application for clarification with the AAR and is not satisfied with the result can appeal to the AAAR, based on the provisions of Section 99 of the Central GST (CGST) Act of 2017.

AAAR members

The AAAR is constituted separately for each state and will have two members:

• The chief commissioner of central tax
• A state commissioner

Each state must appoint members to the AAAR separately, similar to the procedure for AAR. Delhi was the first state to appoint members, followed by Maharashtra.

Appeal process

Taxpayers unsatisfied with a ruling by the AAR must appeal to the AAAR within 30 days from the date the AAR order is communicated. This time limit may be extended by another 30 days if the AAAR finds the applicant was legitimately prevented from filing the appeal on time.

At this time, taxpayers must file applications for AAR, or appeal to AAAR, manually by submitting documents to the concerned jurisdictional office. Once the GST Network has stabilized, however, taxpayers will file applications online.

Fee for appealing with the AAAR

The application to appeal with the AAAR must be accompanied by a fee of Rs. 10,000 for CGST and another Rs. 10,000 for the respective state or union GST.

Appeal timeline

As per Section 101, Subsection 2, the AAAR shall rule on the appeal within 90 days from the date the application [s filed. After considering arguments by the concerned parties, the AAAR will either uphold the AAR order, amend it, or modify it.

If AAAR officials cannot come to an agreement on any of the questions raised by the applicant in his/her appeal, no advance ruling will be issued. The AAR order will stand.

Amendment/rectification of advance ruling

Based on the provisions of Section 102 of the CGST Act, a ruling passed under the provisions of Section 101 can be rectified within six months from the date the ruling is passed. Rectification of the order can be done in one of three ways:

• By the AAAR
• By any officer of the department
• By the applicant

Applicability of the order passed by the AAAR

As per the provisions of Section 103 of the CGST Act, orders passed by the AAAR will only be applicable:

o   To the applicant who has appealed

o   In the state where the order is passed

o   Until the time when there is a change in the act or any other related provisions under the act

o   Until the circumstances under which the appeal is filed change

As per the provisions of Section 104 of the CGST Act, the order passed will be void where the applicant has obtained it in any of the following manners:

o   By submission of wrong information

o   Suppression of facts

o   Misrepresentation of facts

In such a case, the applicant will be subject to the provisions of the act from the date the appeal was filed to the date it is withdrawn. The applicant will have an opportunity to prove his/her case before an order is passed.

AAAR procedures

As per the provisions of Section 106 of the CGST Act, the AAAR will set up their own procedures for regulation.

For appealing against a ruling passed under the provisions of Section 98, Subsection 6 of the CGST Act, the applicant must file Form GST ARA – 02 manually, based on the notification number 55 / 2017 – Central Tax dated 15 November 2017.

Only time will tell how taxpayers perceive the AAAR. Many states have yet to notify the central government of their AAAR members. And, though AAAR is a welcome provision, the two-member boards may be less balanced than the three-member AAR.

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