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.

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.