Advance Ruling [Sections 96A to 96I]

Advance Ruling [Sections 96A to 96I] :

Chapter VA of the Finance Act, 1994 provides for the advance ruling in respect of a question of law or fact regarding the liability to pay service tax in relation to a service proposed, in the specified manner.

(1) Definitions [Section 96A]: In this chapter unless the context otherwise requires, –

(a) Advance ruling: means the determination, by the Authority of a question of law or fact specified in the application regarding the liability to pay service tax in relation to a service proposed to be provided, by the applicant.

(b) Applicant: means :-

(i) (a) a non-resident setting up a joint venture in India in collaboration with a non-resident or a resident; or

(b) a resident setting up a joint venture in India in collaboration with a nonresident; or

(c) a wholly owned subsidiary Indian company, of which the holding company is a foreign company, who or which, as the case may be, proposes to undertake any business activity in India;

(ii) a joint venture in India; or

(iii) a resident falling within any such class or category of persons, as the Central Government may, by notification in the Official Gazette, specify in this behal f,

and which or who, as the case may be, makes application for advance ruling under sub – section (1) of section 96C.

Central Government has specified a public sector company, resident public limited company, resident private limited company and resident firm for the purpose of clause (iii) above.

1. Public sector company: A public sector company shall have the same meaning as is assigned to it in section 2(36A) of the Income Tax Act, 1961.

2. Public limited company: A public limited company shall have the same meaning as is assigned to “public company” in section 3(1)(iv) of the Companies Act, 1956 1 and shall include a private company that becomes a public company by virtue of section 43A of the said Companies Act, 1956.

3. Resident: A resident shall have the same meaning as is assigned to it in section 2(42) of the Income-tax Act, 1961 in so far as it applies to a company.

4. Private limited company: A private limited company shall have the same meaning as is assigned to “private company” in section 2(68) of the Companies Act, 2013.

5. Firm: A firm shall have the meaning assigned to it in section 4 of the Indian Partnership Act, 1932 and includes-

(i) the limited liability partnership as defined in section 2(1)(n) of the Limited Liability Partnership Act, 2008; or

(ii) limited liability partnership which has no company as its partner; or

(iii) the sole proprietorship; or

(iv) one Person Company.

Here

(a) Sole proprietorship means an individual who engages himself in an activity as defined in section 96A(a) of the Finance Act, 1994.

(b) One Person Company means as defined in section 2(62) of the Companies Act, 2013.

6. Resident: A resident shall have the meaning assigned to it in section 2(42) of the Income-tax Act, 1961 in so far as it applies to a resident firm.

7. Joint venture in India: Joint venture in India means a contractual arrangement whereby two or more persons undertake an economic activity which is subject to joint control and one or more of the participants or partners or equity holders is a non-resident having substantial interest in such arrangement.

Thus, in case of a joint venture an applicant for advance ruling can be made only when one of the partners is non-resident.

(d) Authority: means the Authority for Advance Rulings, constituted under sub-section

(1), or authorised by the Central Government under sub-section (2A), of section 28F of the Customs Act, 1962.

(e) Non-resident, Indian company and Foreign company: shall have the meanings respectively assigned to them in clauses (30), (26) and (23A) of section 2 of the Income-tax Act, 1961.

(f) Other words : Words and expressions used but not defined in this Chapter and defined in the Central Excise Act, 1944 or the rules made thereunder shall apply, so far as may be, in relation to service tax as they apply in relation to duty of excise.

(2) Vacancies, etc., not to invalidate proceedings [Section 96B]: No proceeding before, or pronouncement of advance ruling by, the Authority under this Chapter shall be questioned or shall be invalid on the ground merely of the existence of any vacancy or defect in the constitution of the Authority.

(3) Application for advance ruling [Section 96C]

(a) Form of application: An applicant desirous of obtaining an advance ruling under this Chapter may make an application in such form and in such manner as may be prescribed, stating the question on which the advance ruling is sought.

(b) Questions on which advance ruling can be sought: The question on which the advance ruling is sought shall be in respect of,-

(a) classification of any service as a taxable service under Chapter V;

(b) the valuation of taxable services for charging service tax;

(c) the principles to be adopted for the purposes of determination of value of the taxable services under the provisions of Chapter V;

(d) applicability of notifications issued under Chapter V;

(e) admissibility of credit of duty or tax in terms of the rules made in this regard;

(f) determination of the liability to pay service tax on a taxable service under the provisions of Chapter V.

(c) Copies and fees of application: The application shall be made in quadruplicate and be accompanied by a fee of ` 2,500.

(d) Time-limit for withdrawal of application: An applicant may withdraw an application within 30 days from the date of the application.

(4) Procedure on receipt of application [Section 96D]

(1) On receipt of an application, the Authority shall cause a copy thereof to be forwarded to the PCCE/CCE and, if necessary, call upon him to furnish the relevant records.

(2) The Authority may, after examining the application and the records called for, by order, either allow or reject the application.

However, the Authority shall not allow the application where the question raised in the application is-

(a) already pending in the applicant’s case before any Central Excise Off icer, the Appellate Tribunal or any Court; or

(b) the same as in a matter already decided by the Appellate Tribunal or any Court.

However, no application shall be rejected under this sub-section unless an opportunity has been given to the applicant of being heard. Also, where the application is rejected, reasons for such rejection shall be given in the order.

(3) A copy of every order made under sub-section (2) shall be sent to the applicant and to the PCCE/CCE.

(4) Where an application is allowed under sub-section (2), the Authority shall, after examining such further material as may be placed before it by the applicant or obtained by the Authority, pronounce its advance ruling on the question specified in the application.

(5) On a request received from the applicant, the Authority shall, before pronouncing its advance ruling, provide an opportunity to the applicant of being heard, either in person or through a duly authorised representative.

“Authorised representative” has the meaning assigned to it in sub-section (2) of section 35Q of the Central Excise Act, 1944.

(6) The Authority shall pronounce its advance ruling in writing within 90 days of the receipt of application.

(7) A copy of the advance ruling pronounced by the Authority, duly signed by the Members and certified in the prescribed manner shall be sent to the applicant and to the PCCE/CCE, as soon as may be, after such pronouncement.

(5) Applicability of advance ruling [Section 96E]

(1) The advance ruling pronounced by the Authority under section 96D shall be binding only-

(a) on the applicant who had sought it;

(b) in respect of any matter referred to in sub-section (2) of section 96C;

(2) The advance ruling referred to in sub-section (1) shall be binding as aforesaid unless there is a change in law or facts on the basis of which the advance ruling has been pronounced.

(6) Advance ruling to be void in certain circumstances [Section 96F]

(1) Where the Authority finds, on a representation made to it by the PCCE/CCE or otherwise, that an advance ruling pronounced by it under sub-section (4) of section 96D has been obtained by the applicant by fraud or misrepresentation of facts, it may, by order, declare such ruling to be void ab initio and thereupon all the provisions of this Chapter shall apply (after excluding the period beginning with the date of such advance ruling and ending with the date of order under this subsection) to the applicant as if such advance ruling had never been made.

(2) A copy of such order shall be sent to the applicant and the PCCE/CCE.

(7) Powers of Authority [Section 96G]

(1) The Authority shall, for the purpose of exercising its powers regarding discovery and inspection, enforcing the attendance of any person and examining him on oath, issuing commissions and compelling production of books of account and other records, have all the powers of a civil court under the Code of Civil Procedure, 1908.

(2) The Authority shall be deemed to be a civil court for the purposes of section 195, but not for the purposes of Chapter XXVI of the Code of Criminal Procedure, 1973, and every proceeding before the Authority shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228, and for the purpose of section 196 of the Indian Penal Code.

(8) Procedure of Authority [Section 96H]: The Authority shall, subject to the provisions of this Chapter, have power to regulate its own procedure in all matters arising out of the exercise of its powers under this Act.

(9) Power to make rules [Section 96I]

(1) The Central Government may, by notification in the Official Gazette, make rules for carrying out the provisions of this Chapter.

(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely: –

(a) the form and manner for making application under sub-section (1) of section 96C;

(b) the manner of certifying a copy of advanced ruling pronounced by the Authority under sub-section (7) of section 96D;

(3) Every rule made under this Chapter shall be laid, as soon as may be, after it is made, before each House of Parliament.

Leave a Reply