Section 104 of GST – Advance ruling to be void in certain circumstances
Statutory Provision (1) Where the Authority or the Appellate Authority 15[or the National Appellate Authority] finds that advance ruling pronounced by it under sub-section (4) of section 98 or under sub-section (1) of section 101 16[or under section 101C] has been obtained by the applicant or the appellant by fraud or suppression of material facts or misrepresentation of facts, it may, by order, declare such ruling to be void ab initio and thereupon all the provisions of the Act or the Rules made there under shall apply to the applicant or the appellant as if such advance ruling had never been made: Provided that no order shall be passed under this sub-section unless an opportunity of being heard has been given to the applicant or the appellant. Explanation. – The period beginning with the date of such advance ruling and ending with the date of order under this sub-section shall be excluded while computing the period specified in sub-sections (2) and (10) of section 73 or sub-sections (2) and (10) of section 74.(2) A copy of the order made under sub-section (1) shall be sent to the applicant, the concerned office and the jurisdictional officer. Related Provisions of the Statute
Analysis and Updates
Introduction It states the circumstances under which the ruling would be considered as void ab initio and the resultant impact. Analysis (i) Where the Authorities (AAR or Appellate Authority, as the case may be) subsequently discover that an advance ruling has been obtained by the applicant or appellant fraudulently or by way of suppression of material facts or misrepresentation of facts, the Authorities are empowered to declare such a ruling to be void ab initio. (ii) The above would result in all the provisions of the Act becoming applicable to the applicant as if such advance ruling had never been made. (iii) However, no such order can be passed by the AAR or Appellate Authority without giving the applicant/appellant an opportunity of being heard. A copy of such order, once passed, shall be sent to the applicant appellant, the AAR and the concerned/ jurisdictional officer. (iv) The period beginning with the date of advance ruling and ending with the date of order declaring the advance ruling to be void ab initio shall be excluded in computing the period for issuance of Show-cause notice and adjudication order under sub-section(2) and (10) of both Sections 73 and 74. Sections 73(2) and 73(10) specify the time limit within which a show cause notice and adjudication order respectively, may be issued in a case where the tax is not paid, short paid, erroneously refunded or ITC has been wrongly availed or utilised for any reason, other than the reason of fraud or any wilful-misstatement or suppression of facts to evade tax. Similarly, Section 74(2) and 74(10) specifies the time limit within which a show cause notice and adjudication order respectively, may be issued in a case where the tax is not paid, short paid, erroneously refunded or ITC has been wrongly availed or utilised by reason of fraud or any wilful misstatement or suppression of facts. The period of limitation for raising a demand for recovery under Section 73(10) and Section 74(10) has been pegged at 3 years and 5 years respectively from the date of furnishing the annual return for the year in respect of which a demand is being raised or within three years from the date of erroneous refund. The said period of 3 and 5 years shall be extended by the period equivalent to the period beginning with the date of advance ruling and ending with the date of order declaring the advance ruling to be void ab initio, to enable the officer to issue a show cause notice or adjudication order. What this section seeks to do is to provide the proper officers an additional time period to recover such amount from the applicant/appellant as would have been payable by him had he not sought the advance ruling fraudulently. Issues and Concerns (i) One should consider if this section can be made applicable to render an advance ruling to be void ab initio in bona fide cases where the applicant/appellant himself was not aware of certain facts at the time of seeking the advance ruling. (ii) Would the advance ruling also be declared to be void ab initio where an applicant on subsequent realisation of having genuinely erred in placing the facts before the AAR or Appellate Authority, voluntarily brings it to the notice of the AAR or Appellate Authority? Or would it be more appropriate for an applicant to seek another advance ruling based on current facts that have subsequently come to his notice? (iii) Where the applicant/appellant has raised multiple issues to be decided by way of an advance ruling and it was subsequently discovered by the Authorities that there was suppression of fact in respect of one particular issue, can the advance ruling be held to be valid in respect of the other issues raised therein not involving any suppression of fact? Comparative review The provision relating to the circumstances when an advance ruling can be declared void ab initio are more or less the same as those in the erstwhile central Indirect Tax laws as contained in section 23F of Central Excise Act, section 28K of Customs Act and section 96F of the Finance Act, 1994 except that under GST laws, an additional criterion of “suppression of material facts” has been added to serve as a basis for declaring an advance ruling void ab initio. Related Provisions Recommended Articles –
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