Government along with the GST Council plans to restructure the advance ruling mechanism(AAR) under the GST by initiating a centralized authority or 4 regional AAR authorities passed conflicting orders across various states.
As per the Goods and Services Tax(GST) law, every state must arrange Authority for Advance Rulings (AAR) which consists of one member from the Central Tax department and other member from their specific state.
Turbulence created by passing conflicting rules by various officials on the same lines, the Finance Minister, Mr Arun Jaitley has plans to set up a centralized structure AAR or regional AARs according to sources, officials said.
As tax officials are a part of the authorities, there exist some discrepancies in the process of safeguarding the interest of revenue while passing their rulings, the officials report.
To protect the interest of revenue, they end up getting too involved into the law system. At times, the order passed goes beyond what the law is intended to do, which results in further complications and litigation, officials concluded.
The AARs among various states, so far have passed nearly 60 orders under the GST Act, however majority of the states have yet to structure the GST appellate authority to captivate the appeal against the AAR judgement.
Most recently, the New Delhi bench of the AAR stated that the duty-free outlets in airports are accountable to collect GST tax from the passengers. While, these shops were free of SGST and CGST in the previous Tax regime, Revenue department has plans to turn up with some explanation for exempting duty-free outlets from GST.
According to the Law firm Titus & Co Managing Partner Diljeet Titus, expresses his view according to the present situation, the Government must connect the various AARs electronically, so that the members are well informed about the problems and opinions of various authorities to refrain from taking any contradictory views. This helps in avoiding authority shopping and safeguard efficient working of the AAR’s he added.
On the other hand, under GST the scope of AAR has broadened, and every tax payer can file an application for the advance ruling for a minimal fee of Rs 10,000. The operations of AAR are assigned to the tax officers, who express the intention for setting up AAR is fair and unbiased Mohan states.
Lakshmi Kumaran & Sridharan Partner Badri Narayanan said, in majority of the cases prior to set up of AAR, the authority has given ruling in the interest of revenue in absence of appellate authority.
A better idea would be, if AARs are removed from the Finance Ministry and are manned by officials of the Law Ministry, who have the authority to take right decisions on the law point and not biased with the intention to safeguard the interest of revenue” Narayan added.
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