Section 104 – Advance Ruling to Be Void in Certain Circumstances

Section 104 of the Central Goods and Services Tax Act, 2017 deals with situations in which an advance ruling can be declared void ab-initio because it was obtained through fraud, suppression of material facts or misrepresentation of facts.

An advance ruling is intended to provide certainty to a taxpayer on specified GST questions relating to a supply undertaken or proposed to be undertaken by the applicant. However, that certainty is based on the facts and information presented before the Authority. If the applicant or appellant obtains the ruling by withholding material information, making a false representation or using fraudulent means, Section 104 allows the Authority, Appellate Authority or National Appellate Authority to declare the ruling void from the beginning.

The effect is significant. Once an advance ruling is declared void under Section 104, the GST law applies to the applicant or appellant as if the advance ruling had never been made. The provision also protects the taxpayer’s right to be heard before such an order is passed.

What Is Section 104 of the CGST Act?

Section 104 is titled “Advance ruling to be void in certain circumstances.”

The provision applies where the Authority, Appellate Authority or National Appellate Authority finds that an advance ruling was obtained by:

• fraud;
• suppression of material facts; or
• misrepresentation of facts.

If the required conditions are established, the relevant authority may, by order, declare the advance ruling to be void ab-initio.

The current provision also covers rulings pronounced by the National Appellate Authority under Section 101C, in addition to rulings pronounced by the Authority under Section 98(4) and the Appellate Authority under Section 101(1).

Why Is Section 104 Important?

An advance ruling is based on the facts and circumstances presented by the applicant.

For example, a taxpayer may ask the Authority whether a particular activity amounts to a supply, whether a particular notification applies, whether input tax credit is admissible or what tax liability arises from a particular transaction.

The Authority makes its decision based on the application, documents, facts and legal position presented before it.

If important facts are deliberately concealed or incorrectly represented, the resulting ruling may have been obtained on an incomplete or false factual foundation.

Section 104 addresses this situation by allowing the ruling to be declared void ab-initio.

Exact Meaning of “Void Ab-Initio”

The expression “void ab-initio” means void from the beginning.

Under Section 104, once an advance ruling is declared void ab-initio, the law applies to the applicant or appellant as though the advance ruling had never been made.

This is different from simply saying that an advance ruling is no longer applicable because the law or facts have subsequently changed.

Section 103 and Section 104 Are Different

Section 103 deals with the normal applicability and binding effect of an advance ruling.

Section 103(2) provides that an advance ruling remains binding unless the law, facts or circumstances supporting the original ruling have changed.

Section 104 deals with something fundamentally different: the ruling was obtained through fraud, suppression of material facts or misrepresentation of facts.

Therefore:

Section 103 → When and on whom an advance ruling is binding

Section 104 → When an advance ruling can be declared void because it was improperly obtained

Who Can Declare an Advance Ruling Void?

Section 104 refers to three authorities:

1. Authority for Advance Ruling (AAR)
2. Appellate Authority for Advance Ruling (AAAR)
3. National Appellate Authority for Advance Ruling

The current statutory wording expressly includes the National Appellate Authority in Section 104.

This reflects the amendments made to the advance ruling framework to include the national appellate mechanism.

When Can Section 104 Be Invoked?

Section 104 identifies three specific grounds:

1. Fraud

The advance ruling must have been obtained through fraud.

Fraud involves deliberate deceptive conduct intended to obtain an outcome through dishonest means.

A mere mistake or misunderstanding should not automatically be treated as fraud. The relevant authority must examine the circumstances and the evidence before declaring the ruling void.

2. Suppression of Material Facts

The second ground is suppression of material facts.

A material fact is a fact that is relevant to the determination of the question on which the advance ruling was sought.

If an applicant knowingly withholds an important fact that could affect the ruling, the issue of suppression may arise.

3. Misrepresentation of Facts

The third ground is misrepresentation of facts.

This can arise where facts presented before the Authority do not correctly represent the actual transaction or circumstances.

For example, if an applicant describes a transaction as having one contractual structure while the actual agreement contains materially different terms, the Authority may need to examine whether the ruling was obtained through misrepresentation.

The three grounds are specifically stated in Section 104 and should not be treated as interchangeable with an ordinary disagreement over the interpretation of GST law.

Fraud Under Section 104

Fraud is a serious ground under Section 104.

For Section 104 to be relevant, the issue is not simply that the applicant’s interpretation of the GST law was later found to be incorrect.

There is an important distinction between:

• making a legal argument that is ultimately unsuccessful; and
• obtaining a ruling by fraudulent conduct.

Section 104 specifically addresses the latter situation.

Therefore, a taxpayer should not assume that every incorrect statement or every unsuccessful legal interpretation automatically results in Section 104 consequences. The statutory ground must be established in the circumstances of the particular case.

Suppression of Material Facts

Suppression of material facts is another important ground.

The word “material” is significant.

Not every minor omission is necessarily a material suppression.

The omitted information should be relevant to the question on which the advance ruling was obtained.

Example

Suppose a company asks whether its particular service qualifies for a GST exemption.

The company provides the Authority with its contract and describes the service.

However, the company does not disclose that an additional service is bundled with the main service and that this additional component is relevant to the exemption question.

If the omitted information materially affects the tax treatment, the Authority may examine whether the advance ruling was obtained by suppression of material facts.

The actual determination would depend on the facts and evidence of the case.

Misrepresentation of Facts

Misrepresentation means presenting facts inaccurately or incorrectly.

An advance ruling application should accurately describe the transaction for which the ruling is requested.

Example

Suppose an applicant tells the Authority that goods are supplied directly to customers.

In reality, the contractual arrangement involves an intermediary who purchases and resells the goods.

If this difference is material to the GST question and the ruling was obtained on the basis of the incorrect description, Section 104 may become relevant.

The important point is that the misrepresented fact must be connected with the advance ruling and its factual foundation.

Section 104 Does Not Mean Every Mistake Makes a Ruling Void

A taxpayer may make an innocent mistake in an application.

A taxpayer may also take a legal position that the Authority does not accept.

These situations should not automatically be equated with fraud, suppression or misrepresentation.

Section 104 specifically identifies the circumstances in which a ruling may be declared void.

Therefore, the nature of the mistake, the importance of the fact, the circumstances in which it was presented or omitted, and the evidence available are relevant to the determination.

Opportunity of Being Heard

One of the most important safeguards in Section 104 is the opportunity of being heard.

The provision states that no order under Section 104(1) shall be passed unless an opportunity of being heard has been given to the applicant or appellant.

This means that the authority cannot simply declare an advance ruling void without giving the affected person an opportunity to respond.

The applicant or appellant should therefore have an opportunity to explain:

• the facts of the transaction;
• the information supplied in the original application;
• any alleged omission;
• any alleged misrepresentation;
• the documents submitted;
• the circumstances surrounding the ruling; and
• why the statutory grounds for Section 104 are or are not satisfied.

Section 104 and Natural Justice

The hearing requirement reflects the importance of procedural fairness.

A declaration that an advance ruling is void ab-initio can have significant tax consequences because the taxpayer loses the benefit of treating the ruling as applicable.

Therefore, the statutory requirement of providing an opportunity of being heard is an important part of the Section 104 mechanism.

The authority must consider the applicant’s or appellant’s explanation before passing the order.

Effect of Declaring an Advance Ruling Void

The most significant consequence is contained in the statutory phrase that all provisions of the CGST Act and the rules made thereunder shall apply as if the advance ruling had never been made.

This means that the taxpayer cannot continue to rely on the advance ruling after it has been declared void under Section 104.

The GST position must instead be determined under the applicable provisions of the law.

Simple Example

Suppose:

• A company obtains an advance ruling in 2024.
• The company relies on the ruling for its GST treatment.
• It is later found that the ruling was obtained by suppression of a material fact.
• The competent authority declares the ruling void ab-initio.

The statutory consequence is that the company is treated as though the advance ruling had never been made.

The applicable GST provisions therefore have to be applied without relying on that advance ruling.

What Happens to the Period During Which the Advance Ruling Was in Force?

Section 104 contains an important limitation-period provision.

The Explanation to Section 104 provides that the period beginning with the date of the advance ruling and ending with the date of the order declaring the ruling void is excluded while computing the periods specified in:

• Section 73(2) and Section 73(10); and
• Section 74(2) and Section 74(10).

This is important because declaring an advance ruling void can have consequences for subsequent tax determination proceedings.

The exclusion prevents the period during which the advance ruling existed and until it was declared void from simply consuming the statutory limitation period applicable to the relevant proceedings under Sections 73 and 74.

Why Is the Limitation Exclusion Important?

Consider a situation where an advance ruling remains in place for a substantial period before the authority later declares it void.

If that period were always counted normally for limitation purposes, the tax authorities could potentially lose part of the available statutory period for determining tax.

The Explanation to Section 104 therefore provides a specific exclusion for the relevant period.

This is an important procedural consequence of declaring an advance ruling void.

Section 104 and Sections 73 and 74

Sections 73 and 74 deal with determination of tax that has not been paid, has been short paid, has been erroneously refunded or involves wrongly availed or utilised input tax credit, subject to their respective statutory conditions and applicable periods.

Section 104 does not itself determine the tax liability.

Instead, where an advance ruling is declared void, the taxpayer is treated as if that ruling had never been made, and the applicable provisions of the GST law can then operate.

The Explanation to Section 104 specifically addresses the computation of periods under Sections 73 and 74.

👉 Read More → Section 103 – Applicability of advance ruling

Section 104 and Section 103 – Detailed Comparison

Basis	Section 103	Section 104
Main subject	Applicability of advance ruling	Advance ruling becoming void
Purpose	Determines binding effect	Addresses improperly obtained ruling
Normal situation	Valid advance ruling	Fraud, suppression or misrepresentation
Main consequence	Ruling binds specified persons	Ruling is declared void ab-initio
Effect on ruling	Continues subject to Section 103(2)	Treated as if never made
Hearing	Depends on relevant proceeding	Expressly required before Section 104 order
Limitation provision	No equivalent exclusion	Specific exclusion under Explanation to Section 104

This distinction is essential for understanding the advance ruling chapter.

Section 104 and Section 102 – Difference

Section 102 deals with rectification of an error apparent on the face of the record.

Section 104 deals with a ruling obtained through:

• fraud;
• suppression of material facts; or
• misrepresentation of facts.

The two provisions therefore address different situations.

Section 102

The issue is an apparent error in the order.

Section 104

The issue concerns the manner in which the advance ruling was obtained.

A taxpayer should therefore not confuse a rectification proceeding with a proceeding to declare an advance ruling void.

Section 104 and Section 101C

Section 101C deals with orders of the National Appellate Authority.

The current Section 104 specifically recognises an advance ruling pronounced under Section 101C and allows the National Appellate Authority to declare such ruling void where the statutory conditions under Section 104 are satisfied.

This is important because the national advance ruling framework was incorporated into Chapter XVII through later amendments.

Section 104 and the National Appellate Authority

The inclusion of the National Appellate Authority in Section 104 means that the voiding mechanism is not limited to State-level AAR and AAAR proceedings.

Where the statutory requirements are satisfied, the national authority can also deal with an advance ruling obtained through fraud, suppression of material facts or misrepresentation of facts.

This maintains consistency in the legal treatment of advance rulings across the different levels of the advance ruling framework.

Practical Example – Suppression of a Contractual Term

Suppose a taxpayer applies for an advance ruling regarding whether a particular supply is taxable.

The taxpayer submits a contract but intentionally leaves out a separate contractual clause that requires an additional service to be provided.

The omitted clause materially affects the nature of the supply.

The Authority issues a ruling based on the incomplete facts.

If the authority subsequently establishes that the ruling was obtained through suppression of a material fact, Section 104 may be invoked.

If the ruling is declared void, the taxpayer is treated as though the advance ruling had never been made.

Practical Example – Misrepresentation of the Nature of Supply

Suppose a business describes a transaction as a simple sale of goods.

However, the actual arrangement includes installation, maintenance and other contractual obligations that materially affect the tax treatment.

If those facts were incorrectly represented in the advance ruling application and the ruling was obtained on that basis, the authority may examine the matter under Section 104.

The taxpayer must be given an opportunity to explain the circumstances before an order declaring the ruling void is passed.

Practical Example – Fraudulent Documentation

Suppose an applicant submits documents in support of an advance ruling and the documents are later found to have been fraudulently created or materially manipulated.

If the ruling was obtained through that fraudulent conduct, Section 104 may become relevant.

The authority would need to examine the evidence and follow the statutory process before declaring the ruling void.

What Should a Taxpayer Do Before Applying for an Advance Ruling?

Section 104 highlights the importance of accuracy when preparing an advance ruling application.

A taxpayer should:

1. Describe the transaction accurately.
2. Provide relevant agreements and contracts.
3. Explain the actual business model.
4. Disclose material facts.
5. Avoid selective presentation of facts.
6. Ensure supporting documents are genuine and complete.
7. Clearly identify the question on which the ruling is sought.
8. Maintain consistency between the application and actual business operations.
9. Review subsequent changes in the transaction.
10. Keep records supporting the facts presented to the Authority.

The objective is not simply to obtain a favourable ruling but to obtain a ruling based on a complete and accurate factual foundation.

What Should a Business Do After Receiving an Advance Ruling?

Receiving an advance ruling does not eliminate the need for ongoing compliance.

A business should continue to check whether:

• the facts remain unchanged;
• the contractual arrangement remains the same;
• the relevant GST provisions remain unchanged;
• notifications affecting the transaction have changed;
• the ruling has been rectified;
• any appellate proceedings have altered the ruling; and
• there is any issue affecting the validity of the ruling.

Section 103 already provides that an advance ruling remains binding unless the law, facts or circumstances supporting it have changed. Section 104 adds a separate consequence where the ruling itself was obtained through fraud, suppression or misrepresentation.

Key Compliance Lessons Under Section 104

Section 104 provides several important lessons for taxpayers.

Full Disclosure Matters

An applicant should provide all material facts relevant to the question.

Accuracy Matters

The factual description should correspond with the actual transaction.

Documents Matter

Contracts, invoices, agreements and other supporting records should accurately reflect the facts stated in the application.

Legal Arguments and Facts Are Different

A taxpayer can present a legal interpretation with which the Authority ultimately disagrees. That is different from deliberately presenting false facts.

Changes Should Be Reviewed

Even after receiving a ruling, a taxpayer should monitor changes in the law and the underlying transaction.

The Right to Be Heard Is Important

Before a Section 104 order is passed, the applicant or appellant must be given an opportunity of being heard.

Section 104 – Important Points to Remember

The major points of Section 104 can be summarised as follows:

1. Section 104 deals with an advance ruling being declared void in certain circumstances.
2. It applies where an advance ruling has been obtained through fraud.
3. It also applies where material facts have been suppressed.
4. It also covers misrepresentation of facts.
5. The provision applies to rulings under Section 98(4).
6. It applies to rulings under Section 101(1).
7. It also covers rulings under Section 101C.
8. The Authority, Appellate Authority or National Appellate Authority may declare the ruling void by order.
9. The ruling can be declared void ab-initio.
10. Void ab-initio means the ruling is treated as void from the beginning.
11. After the declaration, GST law applies as if the advance ruling had never been made.
12. The applicant or appellant must be given an opportunity of being heard before the order is passed.
13. Section 104 contains a specific limitation-period exclusion.
14. The period from the date of the advance ruling to the date of the order declaring it void is excluded for specified calculations under Sections 73 and 74.
15. Section 104 is different from Section 103, which deals with applicability and binding effect.
16. Section 104 is also different from Section 102, which deals with rectification of an error apparent on the face of the record.
17. Accurate disclosure of material facts is therefore critical when seeking an advance ruling.

👉 Read More → Section 105 – Powers of Authority, Appellate Authority and National Appellate Authority

Conclusion

Section 104 of the CGST Act provides a specific safeguard against an advance ruling being relied upon when that ruling was obtained through fraud, suppression of material facts or misrepresentation of facts.

An advance ruling provides certainty only when it is obtained on the basis of an accurate and complete factual foundation. Where the Authority, Appellate Authority or National Appellate Authority finds that the ruling was obtained through one of the grounds specified in Section 104, it may declare the ruling void ab-initio.

The consequence is substantial because the GST law then applies to the applicant or appellant as if the advance ruling had never been made. The provision also specifically excludes the period from the date of the advance ruling until the date of the order declaring it void for specified limitation calculations under Sections 73 and 74.

At the same time, Section 104 contains an important procedural safeguard: no order declaring the advance ruling void can be passed without giving the applicant or appellant an opportunity of being heard. This allows the affected person to explain the facts and respond to the allegations before the ruling is declared void.

For businesses, the practical lesson is clear: an advance ruling application should contain a complete, accurate and truthful description of the transaction, supported by appropriate documents. The taxpayer should also ensure that the actual business arrangement remains consistent with the facts on which the ruling was obtained.

Section 104 should therefore be read together with Sections 95 to 103, particularly Section 103 on applicability and Section 102 on rectification. Together, these provisions establish the framework for obtaining, applying, correcting and, where legally justified, declaring an advance ruling void under the GST law.

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