Section 95 of GST – Definitions of Advance Ruling

Section 95 of the CGST Act, 2017, defines the key terms related to the mechanism of Advance Ruling under GST. This section lays the groundwork for understanding how taxpayers can seek clarity on the interpretation of GST laws before entering into a transaction. The concept of Advance Ruling is particularly helpful for businesses looking to avoid legal disputes and ensure compliance.

Extract of Section 95 – Definitions of Advance Ruling

In this Chapter, unless the context otherwise requires,-

(a) “advance ruling” means a decision provided by the Authority or the Appellate Authority 1[or the National Appellate Authority] to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub-section (1) of section 100 2[or of section 101C], in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant;

(b) “Appellate Authority” means the Appellate Authority for Advance Ruling referred to in section 99;

(c) “applicant” means any person registered or desirous of obtaining registration under this Act;

(d) ” application” means an application made to the Authority under sub-section (1) of section 97;

(e) “Authority” means the Authority for Advance Ruling referred to in section 96;

3[(f) “National Appellate Authority” means the National Appellate Authority for Advance Ruling referred to in section 101A]

*Enforced w.e.f. 1st July, 2017.

1. Inserted by s. 104 of the Finance (No. 2) Act, 2019. This amendment shall be effective from a date to be notified.

2. Inserted by s. 104 of the Finance (No. 2) Act, 2019. This amendment shall be effective from a date to be notified.

3. Inserted by s. 104 of the Finance (No. 2) Act, 2019. This amendment shall be effective from a date to be notified.

What Is the Meaning of Advance Ruling Under GST?

According to Section 95(a) of the CGST Act, “advance ruling” refers to a decision provided by the Authority for Advance Ruling, the Appellate Authority for Advance Ruling, or the National Appellate Authority for Advance Ruling. This decision is made on matters or questions specified in:

• Section 97(2),

• Section 100(1), or

• Section 101C.

The advance ruling relates to the supply of goods or services or both, whether the supply is already being undertaken or is merely proposed by the applicant.

This helps in eliminating ambiguity and promoting certainty in the tax treatment of goods and services.

Who Can Apply for an Advance Ruling?

As per Section 95(c), an “applicant” is any person who:

• Is registered under the GST Act, or

• Desires to obtain registration under the Act.

This means both existing and prospective taxpayers can apply for an advance ruling to get clarity on their tax obligations.

What Is an Application Under Advance Ruling?

Section 95(d) defines an “application” as a request submitted to the Authority for Advance Ruling under Section 97(1). The application must be made in the prescribed format along with the requisite fees and documents. It is the first step in the process of obtaining an advance ruling.

Who Is the Authority for Advance Ruling?

As per Section 95(e), the “Authority” refers to the Authority for Advance Ruling (AAR), which is established under Section 96 of the CGST Act. This Authority is responsible for receiving and deciding applications for advance rulings at the state level.

What Is the Role of the Appellate Authority for Advance Ruling?

Section 95(b) defines the “Appellate Authority” as the Appellate Authority for Advance Ruling (AAAR), referred to in Section 99 of the CGST Act. If an applicant or the tax authority is not satisfied with the ruling of the AAR, they can appeal to the AAAR for a reconsideration.

What Is the National Appellate Authority for Advance Ruling?

The “National Appellate Authority” has been introduced through an amendment (Section 95(f)) and refers to the body mentioned in Section 101A. It is intended to resolve conflicting advance rulings issued by different State Appellate Authorities. This ensures uniformity in the interpretation of GST laws across states.

Note: This provision is yet to be notified and brought into effect.

When Was Section 95 of the CGST Act Enforced?

Section 95 of the CGST Act came into force on 1st July 2017, the day when GST was officially implemented across India. Subsequent amendments regarding the National Appellate Authority were introduced in the Finance (No. 2) Act, 2019, but are yet to be notified.

Why Is Section 95 Significant for Taxpayers?

Section 95 is the foundational provision that introduces and defines the entire framework of Advance Ruling under GST. It is significant because:

• It promotes transparency in tax administration.

• It provides legal certainty to taxpayers.

• It reduces litigation by addressing potential disputes in advance.

• It is particularly beneficial to foreign investors and large businesses entering into complex transactions.

Conclusion

Understanding Section 95 of the CGST Act is crucial for businesses that wish to proactively comply with GST regulations. The definitions provided in this section are essential to navigating the advance ruling process and seeking clarity on tax matters before entering into a transaction. As GST law continues to evolve, provisions like Section 95 will play a critical role in ensuring consistency, predictability, and ease of doing business in India.

For assistance in filing applications or representing cases before the Advance Ruling Authorities, businesses should consult with qualified tax professionals.