Section 103 of the Central Goods and Services Tax Act, 2017 deals with the applicability and binding effect of an advance ruling. It explains who is bound by an advance ruling and also provides a separate framework for advance rulings pronounced by the National Appellate Authority.
This provision is important because an advance ruling under GST does not automatically become binding on every taxpayer, every business, or every GST officer across India. Its binding effect depends on the type of ruling, the applicant who obtained it, the relevant tax officers and, in the case of a National Appellate Authority ruling, the special statutory framework under Section 103(1A).
The current Section 103 contains sub-sections (1), (1A) and (2). Sub-section (1) deals with rulings of the Authority for Advance Ruling and Appellate Authority for Advance Ruling. Sub-section (1A) deals specifically with rulings of the National Appellate Authority. Sub-section (2) states that an advance ruling remains binding unless the law, facts or circumstances supporting the original ruling have changed.
What Is Section 103 of the CGST Act?
Section 103 is titled “Applicability of advance ruling.”
The provision establishes the persons on whom an advance ruling is binding.
For an ordinary advance ruling pronounced by the Authority or Appellate Authority, Section 103(1) provides that the ruling is binding:
- on the applicant who sought the ruling; and
- on the concerned officer or jurisdictional officer in respect of that applicant.
Section 103(1A) separately provides that an advance ruling pronounced by the National Appellate Authority is binding on specified applicants who are distinct persons and on registered persons having the same PAN, along with the concerned and jurisdictional officers in relation to those persons.
Therefore, Section 103 is fundamentally a provision about the scope of the binding effect of an advance ruling.
Why Is Section 103 Important?
The advance ruling mechanism allows a taxpayer to obtain clarity on specified GST questions before or during the undertaking of a supply.
However, if every advance ruling automatically became binding on all taxpayers and all GST authorities in India, a ruling obtained by one taxpayer could potentially determine the tax treatment of unrelated taxpayers.
Section 103 prevents that result for ordinary AAR and AAAR rulings by specifically limiting their binding effect.
For example, if a company obtains an advance ruling in Maharashtra, that ruling does not automatically become binding on an unrelated company carrying out a similar transaction in Delhi.
The GST Council’s official FAQ also explains that the advance ruling is applicable to the applicant and the concerned or jurisdictional officer in respect of that applicant.
Section 103(1) – Binding Effect of AAR and AAAR Rulings
Section 103(1) applies to an advance ruling pronounced by the Authority for Advance Ruling (AAR) or the Appellate Authority for Advance Ruling (AAAR) under Chapter XVII.
It provides that the ruling is binding on two categories of persons.
1. The Applicant
The ruling is binding on the applicant who sought the advance ruling.
The applicant is the person who filed the application under Section 97 and requested the Authority to determine a question falling within Section 97(2).
Therefore, the ruling is connected to the particular applicant and the matter for which the ruling was sought.
2. The Concerned or Jurisdictional Officer
The ruling is also binding on the concerned officer or jurisdictional officer in respect of that applicant.
This means that the relevant GST authorities dealing with that applicant must follow the applicable advance ruling, subject to the conditions contained in Section 103.
The provision therefore creates a two-sided binding relationship:
Applicant ↔ Concerned/Jurisdictional GST Officer
The ruling does not automatically bind unrelated taxpayers.
Example of Section 103(1)
Suppose ABC Private Limited applies for an advance ruling regarding the classification of a particular product.
The AAR gives a ruling on the classification.
Under Section 103(1):
- ABC Private Limited is bound by the ruling; and
- the concerned or jurisdictional GST officer is bound by the ruling in relation to ABC Private Limited.
However, another company, XYZ Private Limited, is not automatically bound by ABC’s ruling merely because XYZ sells an identical product.
XYZ may have its own facts, contractual arrangements, business structure or other circumstances and may have to seek its own advance ruling if eligible.
Section 103 Does Not Make Every Advance Ruling a General Precedent
This is one of the most important points about Section 103.
An advance ruling is not automatically equivalent to a general judicial precedent applicable to every taxpayer.
For example, suppose the AAR in one State decides that a particular service provided by Company A is taxable at a particular rate.
Company B provides a similar service.
Company B cannot automatically claim that Company A’s advance ruling is binding on the GST department in Company B’s case.
The statutory binding effect under Section 103(1) is specifically limited to the applicant and the concerned or jurisdictional officer in respect of that applicant.
Actual advance ruling decisions published by the GST Council also demonstrate this distinction. The uploaded reference notes a Rajasthan ruling in which a ruling from another State was specifically treated as non-binding under Section 103.
Section 103(1A) – National Appellate Authority
Section 103 also contains a separate provision dealing with the National Appellate Authority for Advance Ruling.
Section 103(1A) states that an advance ruling pronounced by the National Appellate Authority under Chapter XVII is binding on:
- applicants who are distinct persons and who sought the ruling under Section 101B(1); and
- all registered persons having the same Permanent Account Number issued under the Income-tax Act, 1961.
It also provides that the ruling is binding on:
- the concerned officers; and
- the jurisdictional officers,
in respect of those applicants and registered persons having the same PAN.
This is broader than the ordinary Section 103(1) rule.
Why Is Section 103(1A) Different?
The National Appellate Authority mechanism was created to address conflicting advance rulings issued by Appellate Authorities of different States or Union territories.
A business operating across several States may therefore have multiple GST registrations that are treated as distinct persons under GST.
If a qualifying matter reaches the National Appellate Authority through Section 101B, the resulting ruling has a broader statutory binding effect.
The legislation specifically connects the national ruling with:
- distinct persons who sought the ruling; and
- other registered persons having the same PAN.
This provides a statutory framework for consistency for a business operating through multiple GST registrations.
Example of Section 103(1A)
Suppose ABC Limited has GST registrations in:
- Delhi;
- Maharashtra;
- Karnataka; and
- Gujarat.
For GST purposes, these registrations may constitute distinct persons under Section 25.
Suppose an eligible advance ruling matter is taken through the national-level mechanism under Section 101B and a National Appellate Authority ruling is pronounced.
Under Section 103(1A), the statutory binding effect is not limited merely to the particular GST registration that initiated the ruling.
The provision extends it to the applicants who are distinct persons and to registered persons having the same PAN, subject to the statutory conditions.
The concerned and jurisdictional officers are also bound in relation to those persons.
Section 103(2) – When Does an Advance Ruling Stop Being Binding?
Section 103(2) contains an important qualification.
It provides that an advance ruling referred to in Section 103(1) and Section 103(1A) shall remain binding unless the law, facts or circumstances supporting the original advance ruling have changed.
This means that an advance ruling does not necessarily remain applicable forever regardless of subsequent changes.
There are three important grounds mentioned in Section 103(2):
- Change in law
- Change in facts
- Change in circumstances supporting the original ruling
Change in Law
GST law can change through:
- amendments to the CGST Act;
- amendments to the relevant State GST law;
- changes in notifications;
- changes in applicable rules; or
- other legally relevant changes.
If the legal provision on which the original advance ruling was based changes, the original ruling may cease to be binding to the extent contemplated by Section 103(2).
Example
Suppose an AAR gives a ruling based on a particular notification.
Later, the relevant notification is amended or withdrawn.
If the legal foundation supporting the original ruling has changed, the taxpayer cannot automatically assume that the old ruling continues to govern the transaction in exactly the same way.
Change in Facts
An advance ruling is based on the facts presented by the applicant.
If the actual transaction later becomes materially different from the facts on which the ruling was based, the ruling may no longer be binding for the changed transaction.
Example
Suppose a company seeks a ruling based on a specific contractual arrangement.
The AAR considers:
- the contract;
- the nature of services;
- consideration;
- parties involved; and
- the manner in which the transaction is performed.
Later, the company substantially changes the contractual arrangement.
If the facts supporting the original ruling have changed, Section 103(2) becomes relevant.
The taxpayer should therefore compare the actual transaction with the facts stated in the original advance ruling.
Change in Circumstances
Section 103(2) also refers to a change in the circumstances supporting the original advance ruling.
This is broader than simply looking at the wording of a statute.
The circumstances surrounding the transaction may change in a way that affects the foundation on which the original ruling was issued.
Therefore, businesses should not treat an old advance ruling as permanently applicable without checking whether the legal and factual foundation remains unchanged.
Advance Ruling Is Based on the Applicant’s Facts
A crucial feature of Section 103 is the connection between the ruling and the applicant.
Section 95 defines an advance ruling as a decision given to an applicant on specified questions relating to a supply undertaken or proposed to be undertaken by that applicant.
Section 97 then permits an applicant to seek a ruling on specified questions, including classification, applicability of notifications, time and value of supply, ITC eligibility, liability to pay tax, registration and whether an activity amounts to a supply.
Therefore, the facts presented in the application are highly important.
If another taxpayer’s facts are different, the first taxpayer’s ruling does not automatically become binding on that second taxpayer.
Difference Between Binding Effect and Persuasive Value
It is useful to distinguish between binding effect and persuasive value.
Binding Effect
A person or officer is legally required to follow the ruling within the scope specified by Section 103.
Persuasive Value
A ruling may be examined by another taxpayer, GST officer or authority because it provides an interpretation of a GST provision, but that does not necessarily mean the ruling is legally binding on them under Section 103.
This distinction is important when businesses research GST advance rulings.
A taxpayer may find several AAR or AAAR rulings dealing with a similar issue, but the existence of those rulings does not automatically mean that they bind the taxpayer.
Section 103 and the Same PAN
The same-PAN concept is particularly important for Section 103(1A).
Under the national advance ruling framework, the provision refers to all registered persons having the same PAN issued under the Income-tax Act, 1961.
This can be important for companies and other organisations with registrations in multiple States.
For example, one legal entity may have GST registrations in Delhi, Haryana and Maharashtra.
Although these registrations can be treated as distinct persons for GST purposes, they may share the same income-tax PAN.
A National Appellate Authority ruling falling under Section 103(1A) can therefore have a broader binding effect across such registered persons, as specifically provided by the statute.
Section 103 and Distinct Persons Under Section 25
Section 25 deals with the procedure for registration and provides the framework under which different establishments of the same person in different States or Union territories are treated as distinct persons in specified circumstances.
Section 103(1A) specifically refers to applicants being distinct persons who sought the ruling under Section 101B(1).
Therefore, Section 25 is relevant when understanding the national advance ruling mechanism.
Simple Example
A company has:
- GSTIN A in Delhi;
- GSTIN B in Haryana; and
- GSTIN C in Maharashtra.
The registrations are associated with the same legal entity and PAN but are treated as distinct persons for GST purposes.
The Section 103(1A) framework specifically recognises this structure.
Section 103 and Section 97
Section 97 specifies the questions for which an advance ruling can be sought.
These include:
- classification;
- applicability of notifications;
- time and value of supply;
- admissibility of ITC;
- liability to pay tax;
- registration requirement; and
- whether an activity constitutes a supply.
Section 103 then determines who is bound by the resulting advance ruling.
Therefore:
👉 Read More → Section 104 – Advance ruling to be void in certain circumstances
Section 97 = What can be asked?
Section 103 = Who is bound by the answer?
This is a useful way to understand the relationship between the provisions.
Section 103 and Section 98
Section 98 deals with the procedure on receipt of an application for advance ruling.
Where the application is admitted, the AAR examines the material and gives the applicant and concerned officer an opportunity of being heard before pronouncing its ruling. The ruling is normally pronounced in writing within 90 days from receipt of the application.
Section 103 then determines the binding effect of that ruling.
Thus:
Section 98 → AAR gives ruling
Section 103 → Determines who is bound by that ruling
Section 103 and Section 100
Section 100 provides the appeal mechanism against an advance ruling pronounced under Section 98(4).
An applicant, concerned officer or jurisdictional officer who is aggrieved by the ruling can appeal to the Appellate Authority within the statutory period, subject to the conditions of Section 100.
Once an AAAR order is pronounced under Section 101, Section 103 determines its binding effect.
Therefore, Section 103 applies to both:
- AAR rulings; and
- AAAR rulings.
Section 103 and Section 101B
Section 101B provides the national-level appeal mechanism for qualifying conflicting advance rulings.
Section 103(1A) then deals with the binding effect of the ruling pronounced by the National Appellate Authority.
This creates another important sequence:
Section 101B → National-level appeal
Section 101C → National Appellate Authority order
Section 103(1A) → Binding effect of that ruling
The 2019 amendments specifically inserted Section 103(1A) for this purpose, effective from 1 January 2020.
Section 103 and Section 102
Section 102 provides a mechanism for rectifying an error apparent on the face of the record in specified advance ruling orders.
If an order is rectified, the taxpayer should consider the resulting ruling when determining the applicable position under Section 103.
Therefore:
- Section 102 deals with correction of an apparent error; and
- Section 103 deals with the applicability and binding effect of the resulting advance ruling.
Section 103 and Section 104
Section 104 deals with situations where an advance ruling is obtained through:
- fraud;
- suppression of material facts; or
- misrepresentation of facts.
In such circumstances, the Authority, Appellate Authority or National Appellate Authority, as applicable, can declare the ruling void ab-initio in accordance with Section 104.
This is important because Section 103 deals with the binding effect of a valid advance ruling, while Section 104 deals with circumstances in which the ruling can be declared void from the beginning.
What Happens If the Law Changes After an Advance Ruling?
Suppose an AAR gives an advance ruling based on the law applicable at that time.
Later, the relevant GST provision is amended.
If the amendment changes the legal foundation supporting the ruling, Section 103(2) becomes relevant.
The taxpayer should not simply continue relying on the old ruling without examining the impact of the amendment.
The correct position depends on the nature and extent of the legal change.
What Happens If the Transaction Changes?
Suppose an applicant receives an advance ruling concerning a particular business model.
Later, the applicant:
- changes the contract;
- changes the recipient;
- changes the nature of consideration;
- changes the manner of providing the service;
- introduces an additional component; or
- otherwise materially changes the transaction.
The applicant should examine whether the facts or circumstances supporting the original ruling have changed.
If they have, Section 103(2) may prevent the taxpayer from continuing to treat the original ruling as binding for the changed transaction.
Practical Example – Same Product, Different Taxpayer
Company A obtains an AAR ruling that a particular product falls under a specific classification.
Company B sells the same product.
Company B cannot automatically claim that Company A’s ruling is binding on its own GST position.
Section 103(1) limits the binding effect of the ordinary ruling to the applicant and the concerned or jurisdictional officer in respect of that applicant.
Company B may consider the reasoning in Company A’s ruling, but the statutory binding effect under Section 103(1) does not automatically extend to Company B.
Practical Example – Same Company, Multiple GST Registrations
Now consider Company C, which has GST registrations in several States.
If the matter is an ordinary State-level AAR or AAAR ruling, Section 103(1) governs the binding effect.
If the matter qualifies for and results in a National Appellate Authority ruling under Section 101B, Section 103(1A) provides the broader statutory binding framework for the distinct-person applicants and registered persons having the same PAN.
This distinction is particularly important for businesses operating across India.
Practical Example – Change in Law
Suppose an AAR ruling is based on a particular GST notification.
The notification is subsequently replaced with a new notification that materially changes the tax treatment.
The original ruling should then be examined under Section 103(2).
The taxpayer cannot assume that the old ruling continues unchanged when the legal foundation supporting it has been altered.
Practical Example – Change in Facts
Suppose an applicant originally provides services directly to a customer.
The advance ruling is based on that arrangement.
Later, the applicant starts providing the same services through a different contractual structure involving another party.
If the factual circumstances supporting the original ruling have materially changed, Section 103(2) becomes relevant.
Is an Advance Ruling Binding on the GST Department?
Yes, but only within the scope specified by Section 103.
For an ordinary AAR or AAAR ruling, the concerned or jurisdictional officer is bound in respect of the applicant.
This does not mean that every GST officer across India must follow the ruling for every taxpayer.
The binding effect is therefore applicant-specific for ordinary advance rulings.
Is an Advance Ruling Binding on Other Taxpayers?
Generally, an ordinary AAR or AAAR ruling is not binding on unrelated taxpayers under Section 103(1).
The taxpayer may study the ruling and use its reasoning where relevant, but the statutory binding effect is limited to the persons expressly identified in Section 103.
A National Appellate Authority ruling has the broader binding framework specifically provided under Section 103(1A).
Does Section 103 Mean That an Advance Ruling Is Permanent?
No.
Section 103(2) expressly provides that the ruling remains binding unless the law, facts or circumstances supporting the original advance ruling have changed.
Therefore, the continued applicability of an advance ruling depends on the continued existence of the legal and factual foundation on which it was issued.
Difference Between AAR, AAAR and National Appellate Authority Binding Effect
| Type of ruling | Main provision | Persons bound |
|---|---|---|
| AAR ruling | Section 103(1) | Applicant and concerned/jurisdictional officer in respect of applicant |
| AAAR ruling | Section 103(1) | Applicant and concerned/jurisdictional officer in respect of applicant |
| National Appellate Authority ruling | Section 103(1A) | Specified distinct-person applicants, registered persons having same PAN, and relevant concerned/jurisdictional officers |
The difference is particularly important because a national-level ruling has a broader statutory binding effect than an ordinary State-level advance ruling.
Difference Between Section 103 and Section 104
| Basis | Section 103 | Section 104 |
|---|---|---|
| Main subject | Applicability and binding effect | Advance ruling becoming void |
| Focus | Who must follow the ruling | Whether ruling was obtained improperly |
| Main condition | Valid advance ruling | Fraud, suppression of material facts or misrepresentation |
| Effect | Determines binding scope | Ruling may be declared void ab-initio |
| Hearing | Depends on applicable proceeding | Opportunity of hearing required before declaration |
Section 103 therefore deals with the normal operation of an advance ruling, while Section 104 deals with a situation affecting the validity of the ruling itself.
Practical Compliance Checklist for Businesses
Businesses relying on an advance ruling should periodically review the following:
1. Check the Applicant
Confirm that the ruling was obtained by the same taxable person or falls within the applicable National Appellate Authority framework.
2. Check the Exact Question
Verify that the current transaction is the same question for which the ruling was obtained.
3. Check the Facts
Compare the current transaction with the facts presented before the AAR or AAAR.
4. Check the Law
Review subsequent amendments to:
- the CGST Act;
- the relevant State GST Act;
- GST Rules;
- notifications; and
- other applicable legal provisions.
5. Check Circumstances
Determine whether the commercial or contractual circumstances have materially changed.
6. Check Rectification
If there is an apparent error in the ruling, consider the rectification mechanism under Section 102 where applicable.
7. Check Section 104
If material facts were incorrectly presented or suppressed, examine the consequences under Section 104.
8. Maintain the Ruling
Keep the complete ruling and supporting documents with the GST compliance records.
Key Takeaways of Section 103
Section 103 can be summarised through the following points:
- Section 103 deals with the applicability of advance rulings.
- An ordinary advance ruling under Chapter XVII is binding only within the scope specified by Section 103.
- Under Section 103(1), an AAR or AAAR ruling binds the applicant who sought it.
- It also binds the concerned or jurisdictional officer in respect of that applicant.
- An ordinary advance ruling does not automatically bind unrelated taxpayers.
- Section 103(1A) deals separately with National Appellate Authority rulings.
- A National Appellate Authority ruling has a broader statutory binding effect.
- Section 103(1A) covers specified applicants who are distinct persons and registered persons having the same PAN.
- The relevant concerned and jurisdictional officers are also covered by Section 103(1A).
- Section 103(2) applies to both ordinary and National Appellate Authority rulings.
- An advance ruling remains binding unless the supporting law, facts or circumstances have changed.
- A change in GST law can therefore affect the continued applicability of a ruling.
- A material change in the transaction’s facts can also affect its applicability.
- A change in the circumstances supporting the original ruling can have the same effect.
- Section 103 should be read with Sections 97, 98, 100, 101, 101A, 101B, 101C, 102 and 104.
- Section 103 is different from Section 104, which deals with an advance ruling obtained through fraud, suppression of material facts or misrepresentation.
- Section 103 is also different from the general GST appellate provisions under Chapter XVIII.
Conclusion
Section 103 of the CGST Act is the key provision that determines who is bound by an advance ruling and how long that ruling continues to have binding effect.
For an ordinary ruling pronounced by the Authority for Advance Ruling or Appellate Authority for Advance Ruling, Section 103(1) limits the binding effect to the applicant who sought the ruling and the concerned or jurisdictional officer in respect of that applicant. This means that an AAR or AAAR ruling obtained by one taxpayer does not automatically become binding on unrelated taxpayers.
Section 103(1A) creates a separate framework for rulings of the National Appellate Authority. Such a ruling can bind the specified distinct-person applicants and registered persons having the same PAN, along with the relevant concerned and jurisdictional officers, subject to the statutory conditions. This broader binding effect forms part of the legislative framework for dealing with conflicting advance rulings across States and Union territories.
Section 103(2) is equally important because an advance ruling does not continue to bind regardless of subsequent developments. It remains binding unless the law, facts or circumstances supporting the original advance ruling have changed. Businesses should therefore periodically review whether the legal provisions and factual circumstances on which their advance ruling was based remain substantially unchanged.
In practical terms, Section 103 provides a clear distinction between an advance ruling that is binding for the specified taxpayer and officers and a ruling that may merely be useful as an interpretative reference for other taxpayers. Understanding this distinction is essential for businesses relying on GST advance rulings for their tax compliance and transaction planning.
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