Advance ruling provides binding answers on GST classification, rate, ITC eligibility, and liability BEFORE a transaction. Filed with the state Authority for Advance Ruling (AAR) with ₹10,000 fee. Appeal to AAAR, then High Court. This guide covers procedure, topics, and landmark rulings.
Whether a product/service falls under a specific HSN/SAC code. E.g., Is a food preparation classified as 'namkeen' (5% GST) or 'snack' (12% GST)?
Whether a specific exemption notification or rate notification applies to the applicant's supply. E.g., Does notification for educational services cover coaching institutes?
When the tax liability arises (time of supply) and what is the taxable value. E.g., For continuous supply contracts, when does liability trigger?
Whether ITC on specific inputs/input services is eligible. E.g., Is ITC on construction of factory building available? Is ITC on employee transportation eligible?
Whether a particular transaction is liable to GST at all. E.g., Is a transfer between branches a 'supply'? Is a warranty replacement taxable?
Whether a person is required to obtain GST registration for specific activities. E.g., Does an SEZ unit need separate registration?
File Form GST ARA-01 on the GST portal with ₹5,000 fee (CGST) + ₹5,000 (SGST) = ₹10,000 total. Application must clearly state the question, provide all relevant facts, and declare that the matter is not pending before any other authority.
Platform: GST PortalAAR examines the application for admissibility. If admitted: hearing date is fixed. Applicant presents arguments (personally or through authorized representative). Jurisdictional officer may also make submissions.
Platform: AAR OfficeAAR pronounces ruling within 90 days of receipt of application. Ruling is binding on the applicant AND the jurisdictional officer for that specific applicant. Ruling is public and published on AAR website.
Platform: Written OrderEither the applicant or the jurisdictional officer can appeal to the Appellate Authority for Advance Ruling (AAAR) within 30 days. AAAR issues order within 90 days. AAAR order replaces AAR ruling.
Platform: GST PortalIf AAAR ruling is unfavourable, the applicant can challenge it in the High Court under Article 226 (writ jurisdiction). Several AAR/AAAR rulings have been overturned by High Courts on grounds of legal error.
Platform: High CourtQ: Is food supplied to inpatients (bundled with healthcare) exempt from GST?
Ruling: Yes — food supplied to inpatients as part of healthcare is a composite supply where healthcare is the principal supply (exempt). But canteen food to visitors is taxable.
Impact: Hospitals across India benefit from this ruling.
Q: Is 'fryums' classified as papad (0% GST) or snack (18% GST)?
Ruling: Classified as papad (uncooked/unfried) — 0% GST. Once fried and sold as snack — 18% GST. Classification depends on the state of the product at the time of supply.
Impact: Important for food manufacturers — product state determines GST rate.
Q: Is ITC available on construction of factory building used for manufacturing?
Ruling: No — Section 17(5)(d) blocks ITC on construction of immovable property (except plant and machinery). Factory building is not 'plant and machinery' for ITC purposes.
Impact: Clarified that construction ITC block applies even for manufacturing premises.
Advance ruling (Sections 95-106 CGST Act) is a written decision given by the Authority for Advance Ruling (AAR) on specific GST questions BEFORE a transaction is undertaken. It provides certainty on classification, rate, ITC eligibility, and liability. The ruling is binding on the applicant and the jurisdictional officer. Each state has its own AAR comprising one CGST and one SGST member.
Any registered person or a person desirous of obtaining registration can apply. The question must relate to supply of goods/services undertaken or proposed to be undertaken by the applicant. You cannot seek advance ruling on abstract/hypothetical questions or on behalf of another person. Application fee: ₹5,000 CGST + ₹5,000 SGST = ₹10,000 total.
No. An advance ruling is binding ONLY on the applicant who sought it and the jurisdictional officer/concerned officer for that applicant (Section 103). It is not binding on other taxpayers. However, other taxpayers can use favourable advance rulings as persuasive precedent in their own cases. Different AARs in different states have given contradictory rulings on the same issue.
You have three options: (1) Appeal to AAAR within 30 days (fee: ₹10,000). AAAR order replaces the AAR ruling. (2) Challenge in High Court under Article 226 (writ petition). (3) If the ruling is prospective and you haven't acted on it, you can choose not to undertake the transaction as proposed. The ruling becomes void if the law/facts change after the ruling.
AAR must pronounce the ruling within 90 days of application receipt. AAAR must decide the appeal within 90 days of filing. In practice, timelines vary: some AARs take 3-6 months. Complex cases involving classification disputes or novel legal questions may take longer. You can follow up through the GST portal for status updates.
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