Hypothetical question which has not yet materialized, outside the purview of Advance Ruling

Last updated: 10 April 2021

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The Gujarat Authority for Advance Ruling (AAR) has determined that advance rulings can only be sought for activities currently being undertaken or those definitively proposed, not for hypothetical scenarios or agreements that have not yet been finalised. The applicant, Shree Arbuda Transport, sought a ruling on a proposed consolidated rate for services related to an export agreement that was still unsigned. The AAR dismissed the application, stating that advance rulings are intended to provide clarity on existing or firmly planned business activities to aid tax planning and avoid future disputes.

Court :
AAR Gujarat

Brief :
The Hon'ble AAR Gujarat in M/s. Shree Arbuda Transport (Advance Ruling No.: GUJ/GAAR/R/82/2020 decided on September 17, 2020) has held that the provisions for seeking advance ruling is limited to the activities conducted byM/s. Shree Arbuda Transport ('the Applicant') and cannot be sought for the agreement or matters which have not materialized till date. The provisions of the advance ruling in the Central Goods and Services Tax Act, 2017, ('CGST Act') cannot be sought for the ‘hypothetical questions’ raised on the agreement which has not been signed yet.

Citation :
Advance Ruling No.: GUJ/GAAR/R/82/2020 decided on September 17, 2020

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Judgement posted by

Bimal Jain

Service

FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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