Section 96 of GST – Authority for advance ruling

Section 96 of the CGST Act deals with the Authority for Advance Ruling (AAR). This section clarifies how the AAR functions under the GST regime and defines its applicability across different States and Union Territories. It establishes the framework for providing binding advance rulings to taxpayers seeking clarity on the interpretation of GST laws.

What Does Section 96 of the CGST Act State?

Section 96 reads as follows:

“Subject to the provisions of this Chapter, for the purposes of this Act, the Authority for advance ruling constituted under the provisions of a State Goods and Services Tax Act or Union Territory Goods and Services Tax Act shall be deemed to be the Authority for advance ruling in respect of that State or Union territory.”

This means that the authority created under the State GST Act (SGST) or the Union Territory GST Act (UTGST) is considered the Advance Ruling Authority for that respective State or Union Territory under the CGST Act as well.

Why Was Section 96 Introduced in the CGST Act?

The purpose of introducing Section 96 is to ensure uniformity and consistency in advance rulings across States and Union Territories. Since GST is a dual system with both Central and State tax components, Section 96 allows the Authority constituted at the State/UT level to function under the Central GST framework too, avoiding the need for a separate Central authority in each region.

Who Constitutes the Authority for Advance Ruling?

The Authority for Advance Ruling is constituted under the respective SGST or UTGST Acts. It typically comprises two officers:

• One from the Central Tax administration

• One from the State Tax administration

This ensures a balanced perspective in interpreting the GST laws applicable in that jurisdiction.

What Is the Role of the Authority for Advance Ruling Under Section 96?

The Authority for Advance Ruling plays a crucial role in helping taxpayers by:

• Providing legal clarity on GST-related questions

• Reducing litigation

• Enabling certainty in tax positions before initiating transactions

Taxpayers can approach the AAR to seek guidance on matters such as:

• Classification of goods or services

• Applicability of a notification

• Determination of time and value of supply

• Input tax credit eligibility

• Tax liability on a proposed or undertaken activity

Does the Authority for Advance Ruling Under Section 96 Have Jurisdiction Across India?

No, the Authority for Advance Ruling constituted under a particular State or Union Territory only has jurisdiction over that specific region. The ruling given by the AAR is binding only on the applicant and the concerned jurisdictional tax authority in that State or Union Territory.

However, Section 96 ensures that for the purpose of the CGST Act, the same State-level authority is considered valid without the need for a separate Central-level AAR.

How Does Section 96 Ensure Harmonization Between CGST and SGST?

Section 96 bridges the operational gap between Central and State GST laws. By recognizing the State/UT-level AARs for the purposes of the CGST Act:

• It ensures coordination between the CGST and SGST/UTGST frameworks

• It reduces administrative duplication

• It simplifies the process for businesses seeking advance rulings

Are There Any Challenges Associated With Section 96?

Yes, while Section 96 aims to create a unified structure, it has led to divergent rulings across States. Since each State’s AAR functions independently, there have been cases where the same question has received different answers in different States, leading to confusion.

To address such issues, the National Appellate Authority for Advance Ruling (NAAAR) was proposed under the GST law. The NAAAR aims to resolve conflicting rulings and ensure national uniformity.

What Are the Benefits of the Advance Ruling Mechanism Under Section 96?

The key benefits include:

• Certainty in tax obligations before starting a transaction

• Minimized disputes and litigation

• Time and cost savings for taxpayers

• Better tax compliance and planning

For businesses operating in multiple States, seeking advance rulings in respective jurisdictions can help tailor operations in line with local GST interpretations.

Conclusion

Section 96 of the CGST Act is a cornerstone in the framework of advance rulings under GST. By recognizing the State and Union Territory-level Authorities for Advance Ruling under the Central GST law, it promotes administrative efficiency and legal clarity for taxpayers. However, challenges remain in ensuring uniformity, which future reforms like the National Appellate Authority aim to address. Understanding the provisions of Section 96 is essential for businesses seeking certainty and compliance in their GST affairs.