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Tax on Go


Kick'em out at the threshold
By Venugopal A P
Apr 01, 2021

WE all sympathize with those who seek what is called an advance ruling.

The primary reason being that more often than not the ruling obtained in advance, actually has weaned away many manufacturers and service providers from setting up their shops.

In fact, in a recently reported case, the assessee had to knock the doors of the Appellate Authority to ensure that a paragraph/remark made by the AAR in its order is expunged! Haven't read about it, then visit this citation - 2019-TIOL-82-AAAR-GST

It seems the AAR continues to waste its precious time in entertaining "applications" [which do not fulfil even the preliminary requirements as mandated in law] and passing orders which are, nowadays, supposedly, not even academic in nature.

So much of labour in organizing an online e-hearing is wasted when the result is nothing but ominous.

But before that, let us start at the start!

It is imperative to refer to Section 97(1) of the CGST Act, 2017 as well as Rule 104 of the CGST Rules, 2017 which read as under:

Section 97. (1) An applicant desirous of obtaining an advance ruling under this Chapter may make an application in such form and manner and accompanied by such fee as may be prescribed, stating the question on which the advance ruling is sought.

Rule 104. Form and manner of application to the Authority for Advance Ruling. (1)An application for obtaining an advance ruling under sub-section (1) of section 97 shall be made on the common portal in FORM GST ARA-01 and shall be accompanied by a fee of five thousand rupees, to be deposited in the manner specified in section 49.

(2) The application referred to in sub-rule (1), the verification contained therein and all the relevant documents accompanying such application shall be signed in the manner specified in rule 26.

These provisions are mirrored in the SGST and UTGST Acts of the respective State/Union Territories.

Suffice to say that in terms of the provisions of Section 97 of the CGST Act, 2017 and Rule 104 of the CGST Rules, 2017, the application for obtaining an Advance Ruling under sub-section(1) of Section 97 is to be submitted in FORM-GST ARA-01 (which is the prescribed format for the said application) and shall be accompanied by a fee of Five thousand rupees which is to be deposited in the manner specified in Section 49 of the CGST Act, 2017.

Let us consider the case of an applicant from Gujarat state. As per Section 97 of the GGST Act, 2017 and Rule 104 of the GGST Rules, 2017, the application for obtaining an Advance Ruling under sub-section(1) of Section 97 is to be submitted in FORM-GST ARA-01 and shall be accompanied by a fee of Five thousand rupees which is to be deposited in the manner specified in Section 49 of the GGST Act, 2017.

On a combined reading of the provisions of the aforementioned Section 97 and Rule 104 of both the aforementioned Acts and Rules, it is evident that the application for obtaining an Advance Ruling under sub-section(1) of Section 97 is to be submitted in FORM-GST ARA-01 and should be accompanied by a fee of Ten thousand rupees (Five thousand rupees as per Rule 104 of the CGST Rules, 2017 + Five thousand rupees as per Rule 104 of the GGST Rules, 2017).

So, what should be the fate of such an "application" which is not filed in the prescribed format and/or which is not accompanied by the requisite fees as mandated?

The answer is a resounding NO ADMISSION. The application made seeking an advance ruling is to be thrown out at the threshold.

But is this justified?

When the fact of the matter is that these are purely procedural (provisions) in nature, cutting the journey (of an application seeking advance ruling) short is not advisable as is the norm followed in other similar matters.

Take for example an appeal filed without the mandated pre-deposit. The appellate authority/registry before rejecting the application reminds the appellant of the mandatory requirement of pre-deposit and in most of the cases they comply. However, in case the appellant is still of the view that there is no need for the same on account of some justification that he seeks to offer, the matter is heard by the appellate authority/Bench of Tribunal and an order is passed accordingly viz. extending time for payment or rejection of appeal etc.

Let me list out the cases recently reported by TIOL/TOG and wherein the AAR had rejected the applications as non-maintainable and the reasons being –

Sr no.
GST - Application is rejected for not paying the total fees of Rs.10,000/- i.e. Rs.5,000/- under each head of CGST & GGST as required under provisions of CGST Act and Rules and respective GGST Act & Rules: AAR 2021-TIOL-98-AAR-GST
GST - Application fees for seeking an Advance Ruling has not been paid in full - Only Rs.5000/- paid under the CGST Act/Rules but nothing under GGST Act/Rules - application is invalid: AAR 2021-TIOL-96-AAR-GST
GST - Neither has the application been filed in the proper format nor have the application fees been paid - being an invalid application, same is rejected: AAR 2021-TIOL-95-AAR-GST
GST - Application fees of Rs.10000/- is required to be paid under the proper head i.e. 'CGST' and 'GGST' whereas applicant has paid it under IGST - invalid application, hence rejected: AAR 2021-TIOL-94-AAR-GST
GST - Mandatory fees paid but application seeking advance ruling not in the prescribed format viz. GST-ARA-01 - Application cannot be entertained: AAR 2021-TIOL-93-AAR-GST
GST - Neither has the application seeking a ruling filed in the proper format nor has the application fees been paid - Application rejected: AAR 2021-TIOL-92-AAR-GST
GST - Application filed seeking a ruling but required fees not paid - application rejected: AAR 2021-TIOL-91-AAR-GST

A cursory glance at the orders referred above bring to the fore the gargantuan time and energy the AAR had to expend in conducting the e-hearing and issuing the rejection order, when, all that was needed was the Registry to inform the applicant the things amiss in his application and the issues could have been sorted out.

One may recall the idiom – Throwing the baby out with the bath water!

Moreover, does one expect the applicant to file an appeal against such order of AAR passed by citing section 98(2) of the CGST Act, 2017 by filing an appeal before the AAAR. It is pertinent to note that even if the applicant wishes to file an appeal, he is barred from doing so as section 100(1) mandates that only a ruling pronounced under sub-section (4) of section 98 can be appealed before the AAAR.

That leaves the applicant with only two options – One is to spend time and money and get this order appealed before the High Court in writ proceedings. But this may lead to nowhere.

The second and more prudent and practical option is to make good the shortcomings in the original application viz. paying the right amount of application fees under the right heads and also in the right format. That should suffice.

And, then, knocking the doors of the AAR again!There is nothing in the law which prohibits this.

A simple solution indeed!

[The views expressed are strictly personal.]