India has fast-tracked the creation of a Centralised Appellate Authority of Advance Rulings, wary of divergence in rulings by regional bodies leading to confusion in the three-year-old goods and services tax regime. Discussions have picked up the pace to bring into effect to the proposed body, government officials said.
One of the officials said the need to set up the umbrella body has gained momentum after the Central Board of Indirect Taxes and Customs had to clarify the applicable rates in certain situations, on more than one occasion. “The intent of setting up AARs at the joint commissioner level was to ensure that taxpayers get clarity at the lowest level itself, without having the need to approach a higher authority… it was meant to ease things for taxpayers, but it hasn’t worked out,” said another official, asking not to be named as the discussions have just begun.
Officials said the key issue of allowing all taxpayers to approach the centralised authority and not just those parties that have got conflicting orders in different jurisdictions in a particular case, is being reconsidered. “If I am a large company having entities in different states and have got contrary orders from different AARs, only then can I approach the Central appellate authority… it defeats the purpose of having a Central appellate because such cases would be very few in numbers,” a second official said.
AARs across different states have given contrary rulings on several matters: whether whole time or independent director salaries fall under the ambit of goods and service tax (GST), whether the sale of ice cream in cones or in bulk attract GST as a service, whether 18% tax is leviable on frozen parota or on regular parota as well.
Setting up of the Centralised Appellate Authority for Advance Ruling (AAAR) to deal with cases of conflicting decisions by two or more State Appellate Advance Ruling Authorities on the same issue was approved by the GST Council in its 31st meeting in December 2018, but has not been noticed till date. For getting a reprieve in an adverse ruling from AARs, taxpayers can approach the appellate authority which does not have any judicial members.