GST UPDATE ON BINDING NATURE OF ADVANCE RULING PART-3

GST UPDATE ON BINDING NATURE OF ADVANCE RULING PART-3

In our earlier update, we have analysed the binding nature of advance ruling from the point of view of assessee in a situation where government has issued clarification after decision has been pronounced by the authority for advance ruling. In the present update, we wish to discuss the binding nature of advance ruling vis a vis clarification issued by the government from the point of view of jurisdictional revenue authority.

As discussed in our earlier update, as per section 103(1) of the CGST Act, 2017, the advance ruling pronounced shall be binding only on the applicant who had sought it and on the concerned jurisdictional officer of the applicant. Furthermore, provision contained in sub-section (2) of the section 103 states that the advance ruling shall be binding unless the law, facts or circumstances supporting the original advance ruling have changed.

With respect to example no. 2 taken in our earlier update, we now discuss the impact of clarification and advance ruling on the jurisdictional GST officer. In our earlier update, we had placed reliance on the decision given in the erstwhile Central Excise Laws by the Apex Court in the case of BIRLA JUTE AND INDUSTRIES LTD. VERSUS ASSISTANT COLLECTOR OF C. EX. [2005 (179)ELT 272(Supreme Court)] wherein it was held that Board Circulars are not binding on the assessees and they may opt not to follow these Circulars. However, at the same time, it is worth noting that the board circulars are binding on the departmental authorities. Now, the question arises is that whether the board circulars are binding on the departmental officers unconditionally? The answer is NO and in support of this, reliance is placed on the decision given by the Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, BOLPUR VERSUS RATAN MELTING & WIRE INDUSTRIES [2008 (231) E.L.T. 22 (S.C.)] wherein it was held that although the

circulars are binding on departmental officers but they can challenge the said
circulars in case the said circulars are contrary to the law or Supreme Court decision. Therefore, it is not that the departmental officers cannot challenge the circulars but the question that needs to be answered is that in case where advance ruling has been decided in favour of revenue authorities and in case of
Clarification favourable to the assessee, the jurisdictional officer is bound by the advance ruling or the clarification issued by CBIC? It may be noted that the jurisdictional officer is bound to follow advance ruling with respect to the applicant only while for other assessees, the clarification issued by CBIC would have to be followed. The moot question is that whether law permits such discrimination amongst the assessees wherein the assessee who had sought advance ruling is being put to disadvantageous position when compared with his co-assessees operating in same industry. Moreover, whether jurisdictional officer can take two contrary stand when clarification favourable to the assessee is issued by CBIC. Well, many such questions remain unanswered and it is expected that the government is cautious in resolving the ambiguities created by clarifications and advance rulings pronounced by them.

The content of this GST update is for educational purpose only and notintended forsolicitation.
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GST UPDATE ON BINDING NATURE OF ADVANCE RULING PART-3

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