Is it harmful to go for an advance ruling in GST?

Are you planning to go for an advance ruling in GST?

It sounds a little weird, right? But based on the past record we can say that. Many important issues messed up by some ruling of advanced ruling authority. If you don’t know what is an advance ruling. Read this article. In case a taxpayer decides to go for an advance ruling. He needs to understand that he will be bound by that decision. In case you are aggrieved by that decision you can go to appellate authority for advance ruling. But in the past, there are fewer cases of a favorable decision by AAAR. Now in many cases, if your draft is not strong you may lose even stronger ground. 

One more thing you can’t go to the high court against the order of AAAR. You can only go for a review. Here Decision of JSW energy Vs Union of India. In this case, it is clarified that there is no further appeal is possible against the decision of AAAR. The Court can only go for a judicial review and cant look into the merit of the decision by AAAR. Although in this particular case the court sent it back to AAAR to review their decision as they didn’t provide the opportunity of being heard to the taxpayer. The principle of natural justice was not followed.

What is the way out if you lose, for any reason?

But each case will not be the same. Many times you may get stuck because you opted to go for an advance ruling.  In another case of Mohit minerals at the advance ruling stage, there was no help for the taxpayer. If you are also planning to go for an advance ruling. Check the latest case of clay Craft. Well settled principle of non-taxability of Directors remuneration is now the most unsettled.

Either the drafting of the case shall be very strong. Otherwise, you may get trapped at the Advance ruling level. Many people follow these advance rulings. In spite of the fact that their applicability is very limited. They hardly create any legal precedent.

You can send your reply at the following mail. shaifaly.ca@gmail.com

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