INTRODUCTIONAs was being promoted, Goods and Services Tax (GST) was touted to be the single biggest tax reform to take place in India post-independence. It was intended to be a good and simple tax. It indeed is (pun intended). To this end, one laudable objective was to provide an authority for advance ruling (AAR) which would, amongst others: (i) provide clarity, certainty and reasonability to businesses; (ii) avoid anomalies and litigation with the tax authorities; (iii) help reduce the cost of supplies of goods and services. Unquestionably, in my view, the AAR achieved none of the above. Per contra, it added fuel to the fire.
CONCEPT OF ADVANCE RULINGAs per Section 95 of CGST/SGST Law, an advance ruling means a decision provided by the authority or the Appellate Authority to an applicant on matters or on questions specified in section 97(2) or 100(1) of CGST/SGST Act in relation to the supply of goods and/or services proposed to be undertaken or being undertaken by the applicant. Thus, AAR answers questions. Questions relating to applicability of GST or rate of tax or classification or exemptions. The purport being advance agreement with the tax authorities in order to avoid disputes. It is like a pre-nuptial agreement, which we all know leads to divorce.
The Supreme Court in
Columbia Sportswear Company vs. Director of Income-tax, Bangalore1, expounded the law on these authorities and held that AAR is a tribu
