The GST Council has asked the Centre and states to expedite setting up of appellate authorities for aggrieved entities to appeal against orders of the Authority for Advance Rulings (AAR). With AARs in different states started giving rulings since March, it has become imperative for the Centre as well as states to set up the Appellate Authority for Advance Ruling (AAAR), an official said.
“The Secretariat of the GST Council has shot off letters to the states as well as the Central Board of Indirect Taxes and Customs (CBIC) to nominate members to the AAAR on an urgent basis so that they can start functioning,” the official told PTI. So far only 12 states, including West Bengal, Gujarat, Madhya Pradesh, Rajasthan, Tamil Nadu and Uttar Pradesh, have issued notifications for setting up AAARs. However, these have not become operational as the members have not yet been appointed.
As per the State GST law, the appellate authority will have two members – the Chief Commissioner of Central tax as designated by CBIC and the Commissioner of State tax. The appellate authority has been mandated to pass an order within 90 days of the filing of the appeal. Under the GST (Goods and Services Tax) law, an aggrieved party can file an appeal against the order of the AAR within a period of 30 days, which may be further extended by a month. As per the law, all states are required to set up at least one AAR for seeking advance ruling over GST levy and one appellate authority to hear appeals against the AAR order.
According to experts, the business entities, which are aggrieved by the decision of AAR, currently do not have any remedy in the absence of an appellate authority. Deloitte Haskins & Sells LLP Partner (Indirect Tax) M S Mani said businesses will not be able to file appeals against advance rulings unless the appellate authority is set up in every state. “The recent increase in AAR decisions needs to be matched by a quick constitution of the appellate authority in all states. The constitution of the AAAR should also be on the lines of the CESTAT (Customs, Excise and Service Tax Appellate Tribunal) and other appellate bodies and should not comprise only of tax officials, in order to achieve the objectives laid out for the AAAR,” Mani said.
AMRG & Associates Partner Rajat Mohan said an inimitable feature of GST AAAR is that it is headed by a Chief Commissioner of Central tax and a Commissioner of State tax, such inequality in positions could imbalance the decision making authority towards the senior member. “AAAR also faces the same impediments as AARs do, as decision-making body consists of two revenue officers only and no representation found on the bench from any officer from legal background thereby posing a severe disadvantage to taxpayers,” Mohan said.