Applicability of Advance Ruling

[Narayan Pujar]

Hello Friends,

How does one interpret Sub-section 2 of Section 103 relating to advance ruling -

'The advance ruling referred to in sub-section (1) shall be binding unless the law, facts or circumstances supporting the original advance ruling have changed.'

Example - if an inward supply which was purely for office purposes and accordingly the ruling was also pronounce that ITC will be available. Later after some years, if the inward supply is put to personal or non-business use, whether the non-applicability of advance ruling will be retrospective or prospective? Are there any legal precedents to support that it will be prospective?

I personally believe that it shall be prospective because the advance ruling when applied was based on the facts that existed then unaware of the changes that can take place later. Applying retrospectively seems unfair.

[Sadanand Bulbule]

Dear Sir

 The query contains the answer as well. Your last statement is the answer for your query.

[KASTURI SETHI]

Dear Querist, 

Your belief is correct. It is prospective. When the law is very much clear, there is no need to take shelter of any decision of AAR/AAAR or any court.

The decision of any AAR/AAAR is not for ever. It has 'shelf life', keeping in view of frequent amendments in GST laws.

[Shilpi Jain]

It is difficult to understand the purpose of this query.. Maybe the example is not right.

However, an advance ruling if taken for a transaction proposed to be undertaken and subsequently the transaction actually does not happen the way it was presented to the AAR, then the ruling has no relevance at all since the facts have changed.

[Shilpi Jain]

Whether prospective or retrospective does not matter. As long as these kind of transactions happen - same facts and circumstances, until the law is changed, this ruling will apply.

For transactions where the facts do not match, this ruling will not be applicable.

[Sathasivam venkataraman]

Our Company received (interstate) legal service from an unregistered person . The lawyer raised the RCM invoice along with the New Delhi address. Now, we have to pay CGST+SGST (or) IGST under RCM ?

[Shilpi Jain]

RCM is applicable for services taken from an advocate and not lawyer

AI Summary

Advance ruling binding unless facts or law change; change of use makes prior ITC ruling applicable prospectively only. An advance ruling is binding only while the law, facts, and circumstances that underpinned it remain unchanged; if an inward supply originally held to qualify for ITC is later used for personal or non business purposes, that change of facts removes the ruling's applicability prospectively. Advance rulings apply to transactions matching the material facts considered at the time and cease to be relevant when those facts or the law change, reflecting the limited shelf life of AAR/AAAR determinations.