Section 106 of the Central Goods and Services Tax Act, 2017 deals with the procedure to be followed by the Authority for Advance Ruling, Appellate Authority for Advance Ruling and National Appellate Authority for Advance Ruling.
The provision is brief, but it plays an important role in the advance ruling framework. Unlike provisions that prescribe a detailed step-by-step procedure, Section 106 gives the relevant authorities the power to regulate their own procedure, subject to the provisions contained in Chapter XVII of the CGST Act.
The current heading of Section 106 expressly includes the Authority, Appellate Authority and National Appellate Authority. This wording was introduced through the amendments that expanded the advance ruling framework to include the National Appellate Authority.
In simple terms, Section 106 provides procedural flexibility while requiring the advance ruling authorities to remain within the framework established by the CGST Act and the rules.
What Is Section 106 of the CGST Act?
Section 106 is titled:
“Procedure of Authority, Appellate Authority and National Appellate Authority.”
The section contains a single substantive provision:
“The Authority or the Appellate Authority or the National Appellate Authority shall, subject to the provisions of this Chapter, have power to regulate its own procedure.”
The provision therefore has two important parts:
- The authorities have power to regulate their own procedure.
- That power is subject to the provisions of Chapter XVII of the CGST Act.
Section 106 should therefore not be read as giving unlimited procedural discretion. The authorities can regulate their procedure, but they must operate within the statutory framework governing advance rulings.
Why Is Section 106 Important?
Advance ruling proceedings can involve different types of questions and factual situations.
For example, an applicant may seek a ruling regarding:
- classification of goods or services;
- applicability of a notification;
- time of supply;
- value of supply;
- admissibility of input tax credit;
- liability to pay GST;
- requirement of registration; or
- whether an activity amounts to a supply.
The procedure required to examine one matter may not be identical to another.
Section 106 therefore gives the advance ruling authorities procedural flexibility while keeping them subject to the statutory provisions of Chapter XVII.
This is particularly relevant because Section 105 separately gives the authorities specified civil-court-like powers relating to discovery, inspection, attendance, examination on oath and production of records. Section 106 provides the broader procedural framework within which those powers and other functions can be exercised.
The Exact Meaning of “Regulate Its Own Procedure”
The phrase “regulate its own procedure” means that the Authority, Appellate Authority and National Appellate Authority can determine the procedural manner in which they conduct their proceedings, subject to the CGST Act and applicable rules.
This can include matters such as:
- how submissions are received;
- how hearings are conducted;
- how parties are given opportunities to present their case;
- how documents and evidence are dealt with;
- how procedural directions are issued; and
- other procedural matters necessary for disposing of proceedings.
However, this power cannot be used to override an express requirement of the CGST Act or the rules.
Section 106 Is Subject to Chapter XVII
The words “subject to the provisions of this Chapter” are particularly important.
Chapter XVII of the CGST Act contains the advance ruling framework.
It covers provisions dealing with:
- definitions;
- Authority for Advance Ruling;
- applications;
- procedure on receipt of applications;
- Appellate Authority;
- appeals;
- orders;
- National Appellate Authority;
- rectification;
- applicability of advance rulings;
- voiding of advance rulings;
- powers of the authorities; and
- procedure.
Therefore, the power to regulate procedure under Section 106 operates within this statutory framework.
Section 106 Does Not Override the CGST Act
Section 106 does not allow an advance ruling authority to ignore a statutory requirement simply because it has power to regulate its own procedure.
For example, where the Act specifically provides:
- a period for filing an appeal;
- an opportunity of hearing;
- a period for pronouncing a ruling;
- a prescribed form;
- a prescribed fee; or
- a particular procedure,
the authority must follow the applicable statutory provision.
Section 106 operates as a procedural enabling provision rather than as a replacement for the other provisions of Chapter XVII.
Section 106 and Section 98
Section 98 deals with the procedure on receipt of an application for advance ruling.
It contains specific statutory requirements concerning examination of an application, admission or rejection, opportunity of hearing and pronouncement of the ruling.
For example, where an application is admitted, the Authority examines further material and provides an opportunity of being heard to the applicant or authorised representative and the concerned officer or authorised representative before pronouncing the advance ruling.
Section 98 also provides a statutory period for pronouncing the ruling.
Section 106 does not replace this procedure.
Instead:
Section 98 provides specific statutory procedure.
Section 106 provides general procedural autonomy subject to that statutory framework.
Section 106 and Section 100
Section 100 deals with an appeal to the Appellate Authority for Advance Ruling.
It specifies who may appeal and provides the statutory time limit and prescribed manner for filing the appeal.
Section 106 allows the Appellate Authority to regulate its procedure, but that procedural power remains subject to the requirements of Section 100 and the other provisions of Chapter XVII.
Therefore, the authority cannot use its procedural power to remove or extend a statutory requirement unless the Act itself provides the relevant discretion.
Section 106 and Section 101
Section 101 deals with orders of the Appellate Authority.
The Appellate Authority must give the parties to the appeal or reference an opportunity of being heard before passing its order.
It also contains a statutory time period for passing the order.
Section 106 supports the procedural functioning of the Appellate Authority but does not eliminate the requirements specifically imposed by Section 101.
Section 106 and Section 105
Sections 105 and 106 are closely connected.
Section 105
Section 105 provides specified powers similar to those of a civil court, including powers relating to:
- discovery and inspection;
- enforcing attendance;
- examination on oath;
- issuing commissions; and
- compelling production of books of account and other records.
The current Section 105 expressly covers the Authority, Appellate Authority and National Appellate Authority.
Section 106
Section 106 gives these authorities the power to regulate their own procedure, subject to Chapter XVII.
Therefore:
Section 105 = Procedural and evidentiary powers
Section 106 = Power to regulate procedure
Together, the two provisions provide the procedural foundation for advance ruling proceedings.
Section 106 and the National Appellate Authority
The National Appellate Authority was introduced into the advance ruling framework through amendments made by the Finance (No. 2) Act, 2019.
The amendments specifically changed the marginal heading of Section 106 and inserted the words “or the National Appellate Authority” after “Appellate Authority.”
The amendment was brought into effect from 1 January 2020.
Accordingly, the current Section 106 is not limited to the State-level AAR and AAAR structure.
It covers:
- Authority for Advance Ruling;
- Appellate Authority for Advance Ruling; and
- National Appellate Authority for Advance Ruling.
Procedure of the Authority for Advance Ruling
The Authority for Advance Ruling deals with applications filed under Section 97.
The statutory framework provides specific procedures for:
- receiving applications;
- examining applications;
- admitting or rejecting applications;
- hearing the parties;
- examining relevant material;
- pronouncing the ruling; and
- communicating the ruling.
Within this framework, Section 106 allows the AAR to regulate the procedural details necessary for handling its proceedings.
Procedure of the Appellate Authority for Advance Ruling
The Appellate Authority considers appeals against advance rulings in accordance with Section 100.
The authority must follow the statutory requirements relating to:
- filing of appeal;
- opportunity of hearing;
- examination of the matter;
- pronouncement of the order; and
- communication of the order.
Section 106 gives the Appellate Authority procedural flexibility for matters not exhaustively prescribed elsewhere, while keeping the proceedings within the statutory framework.
Procedure of the National Appellate Authority
The National Appellate Authority operates under the national advance ruling provisions.
Section 101B deals with appeals to the National Appellate Authority in cases involving conflicting advance rulings of Appellate Authorities of two or more States or Union territories.
Section 101C deals with orders of the National Appellate Authority.
Section 106 gives the National Appellate Authority corresponding power to regulate its own procedure, subject to Chapter XVII.
The extension of Section 106 to the National Appellate Authority was specifically made through the 2019 amendment framework.
Does Section 106 Give Unlimited Discretion?
No.
The phrase “regulate its own procedure” should not be interpreted as giving unlimited power.
The authority remains bound by:
- the CGST Act;
- Chapter XVII;
- applicable rules;
- statutory rights of parties;
- prescribed forms and fees where applicable;
- statutory limitation periods; and
- other mandatory legal requirements.
The authority’s procedural discretion operates in the space left available by the legislation.
Section 106 and Principles of Natural Justice
Although Section 106 is brief, the broader advance ruling framework contains express hearing requirements.
For example, Section 98 provides an opportunity of being heard in the circumstances specified there.
Section 101 similarly provides for an opportunity of hearing before an Appellate Authority order.
Section 104 also specifically requires an opportunity of being heard before an advance ruling is declared void under that provision.
Therefore, the power to regulate procedure must operate consistently with the statutory requirements of fair hearing contained in Chapter XVII.
What Are Principles of Natural Justice?
Natural justice generally refers to basic procedural fairness.
In the context of advance ruling proceedings, important elements can include:
- giving an affected party an opportunity to present its case;
- considering relevant material;
- allowing the parties to respond where the law requires it; and
- following the procedure prescribed by the statute.
Section 106 does not itself contain a detailed natural justice code, but the other provisions of Chapter XVII contain specific procedural safeguards.
Example – AAR Application
Suppose ABC Limited applies for an advance ruling concerning the classification of its product.
The Authority receives the application and examines the question.
The statutory provisions determine whether the application can be admitted and how the hearing and ruling are to be conducted.
For procedural matters not specifically prescribed, Section 106 allows the Authority to regulate the manner in which it conducts the proceeding, subject to Chapter XVII.
Example – AAAR Appeal
Suppose an applicant is aggrieved by an AAR ruling and files an appeal before the Appellate Authority.
Section 100 governs the appeal.
Section 101 governs the order.
Within that statutory framework, Section 106 enables the Appellate Authority to regulate its procedural handling of the appeal.
The procedural power does not replace the requirements of Sections 100 and 101.
Example – National-Level Advance Ruling
Suppose conflicting advance rulings from Appellate Authorities of different States concern a qualifying question under the national advance ruling framework.
The matter may proceed under Section 101B.
The National Appellate Authority then deals with the matter under the applicable provisions of Chapter XVII.
Section 106 allows the National Appellate Authority to regulate its procedure while remaining subject to those statutory provisions.
Section 106 and Documents
Advance ruling proceedings can involve extensive documentary material.
Depending on the issue, documents may include:
- agreements;
- invoices;
- purchase orders;
- product specifications;
- accounting records;
- technical literature;
- transaction details;
- correspondence; and
- other relevant records.
Section 105 provides specific powers relating to production and examination of records.
Section 106 provides the procedural flexibility for dealing with such material within the advance ruling proceeding.
Section 106 and Hearings
A hearing may be required under specific provisions of Chapter XVII.
The authority can regulate the procedural aspects of such hearings, subject to the statutory requirements.
For example, the Authority may need to determine how written submissions, supporting documents and oral submissions are handled within the proceeding.
However, the authority cannot disregard an express statutory right of hearing where the Act requires one.
Section 106 and Adjournments
Section 106 does not itself prescribe a general numerical limit on adjournments for AAR, AAAR or the National Appellate Authority.
Accordingly, an authority’s handling of procedural requests such as adjournments must be understood in the context of the statutory framework and the authority’s power to regulate its procedure.
This should not be confused with Section 75(5), which contains a specific statutory limit on adjournments in determination proceedings.
Section 106 and Prescribed Forms
Section 106 does not eliminate prescribed forms.
Where another provision of Chapter XVII or the GST Rules requires an application, appeal or other document to be filed in a particular form, that requirement continues to apply.
For example, the advance ruling framework contains prescribed forms and procedural requirements for applications and appeals.
The authority’s power to regulate its own procedure therefore operates around, rather than instead of, the prescribed statutory framework.
Section 106 and Section 97
Section 97 determines the scope of questions for which an advance ruling application may be made.
It identifies specified questions such as:
- classification;
- applicability of notifications;
- time and value of supply;
- ITC eligibility;
- liability to pay tax;
- registration; and
- whether an activity amounts to a supply.
Section 106 does not expand this substantive jurisdiction.
It only concerns procedure.
Therefore:
Section 97 = Questions that may be raised
Section 106 = How the authority may regulate its procedure
Section 106 and Section 103
Section 103 deals with the applicability and binding effect of advance rulings.
Section 106 deals with procedure.
These provisions therefore operate at different stages.
An authority may regulate how it conducts the proceeding under Section 106, but the binding effect of the resulting ruling is determined under Section 103.
Section 106 and Section 104
Section 104 deals with circumstances in which an advance ruling may be declared void because it was obtained through:
- fraud;
- suppression of material facts; or
- misrepresentation of facts.
Section 106 provides the procedural framework within which the authority conducts its proceedings, while Section 104 contains the substantive statutory grounds for declaring a ruling void.
Section 104 also expressly requires an opportunity of hearing before such an order is passed.
Section 106 and Section 107
Section 107 deals with general appeals to the Appellate Authority against decisions or orders of an adjudicating authority.
That is different from the advance ruling appeal mechanism under Section 100.
Section 106 belongs to Chapter XVII and specifically concerns the procedure of the advance ruling authorities.
Therefore, an appeal against an AAR ruling should not automatically be treated as an ordinary Section 107 appeal.
Section 106 and the General GST Appellate Framework
The advance ruling mechanism has its own statutory structure.
A simplified sequence is:
Section 97 → Application for advance ruling
Section 98 → Procedure on receipt of application
Section 100 → Appeal to AAAR
Section 101 → AAAR order
Section 101B → National Appellate Authority appeal
Section 101C → National Appellate Authority order
Section 102 → Rectification
Section 103 → Applicability
Section 104 → Void advance ruling
Section 105 → Powers
Section 106 → Procedure
This structure helps explain why Section 106 is a supporting procedural provision rather than an independent mechanism for determining GST liability.
Does Section 106 Allow the Authority to Create New Substantive Law?
No.
The power to regulate procedure does not give the Authority, Appellate Authority or National Appellate Authority legislative power.
The authorities decide matters within their statutory jurisdiction.
They cannot use procedural regulations to change:
- the scope of taxable supply;
- statutory tax rates;
- eligibility conditions;
- limitation periods;
- statutory appeal rights; or
- other substantive provisions of the GST law.
Any procedural direction must remain consistent with the Act and applicable rules.
Practical Importance for Taxpayers
For a taxpayer, Section 106 means that an advance ruling proceeding may have procedural requirements determined by the relevant authority within the statutory framework.
A taxpayer should therefore:
- Read the application or appeal requirements carefully.
- Submit documents in the prescribed manner.
- Follow procedural directions issued by the authority.
- Attend hearings when required.
- Provide accurate factual information.
- Keep copies of all submissions and documents.
- Respond within applicable statutory or procedural time limits.
- Maintain records supporting the facts stated in the application.
- Understand whether the matter is before the AAR, AAAR or National Appellate Authority.
- Check the specific statutory provision governing the particular stage of the proceeding.
Why Section 106 Matters for Advance Ruling Proceedings
The advance ruling system needs both statutory certainty and procedural flexibility.
If every procedural step had to be exhaustively prescribed in the Act, it could make the system unnecessarily rigid.
At the same time, unrestricted procedural discretion could create uncertainty.
Section 106 addresses this balance by allowing the authorities to regulate their own procedure subject to Chapter XVII.
This allows procedural matters to be handled flexibly without removing the statutory framework established by Parliament.
Key Differences Between Sections 105 and 106
| Basis | Section 105 | Section 106 |
|---|---|---|
| Main subject | Powers of advance ruling authorities | Procedure of advance ruling authorities |
| Nature | Gives specified civil-court-like powers | Gives power to regulate own procedure |
| Main focus | Evidence, attendance, inspection and records | Conduct and management of proceedings |
| Authority covered | AAR, AAAR and National Appellate Authority | AAR, AAAR and National Appellate Authority |
| Limitation | Powers are specified in Section 105 | Procedure remains subject to Chapter XVII |
| Purpose | Obtain and examine relevant material | Conduct proceedings effectively |
Section 105 and Section 106 therefore complement each other.
Key Differences Between Sections 103, 104, 105 and 106
| Section | Subject | Main purpose |
|---|---|---|
| Section 103 | Applicability of advance ruling | Determines who is bound by the ruling |
| Section 104 | Advance ruling to be void in certain circumstances | Deals with rulings obtained through fraud, suppression or misrepresentation |
| Section 105 | Powers of authorities | Provides specified civil-court-like powers |
| Section 106 | Procedure | Allows authorities to regulate their own procedure |
Together, these provisions cover important aspects of the operation of the advance ruling system.
Important Points to Remember About Section 106
The major points of Section 106 are:
- Section 106 deals with the procedure of advance ruling authorities.
- It applies to the Authority for Advance Ruling.
- It applies to the Appellate Authority for Advance Ruling.
- It also applies to the National Appellate Authority.
- The authorities have power to regulate their own procedure.
- This power is expressly subject to the provisions of Chapter XVII.
- Section 106 does not provide unlimited procedural discretion.
- The authority must comply with mandatory requirements contained elsewhere in the CGST Act.
- It must also follow applicable rules and prescribed procedures.
- Section 106 should be read together with Section 105.
- Section 105 deals with specified civil-court-like powers.
- Section 106 deals with regulation of procedure.
- Section 98 contains specific procedural requirements for applications.
- Section 100 contains specific requirements for appeals to the Appellate Authority.
- Section 101 contains specific requirements concerning AAAR orders.
- Sections 101B and 101C govern the national advance ruling appeal and order framework.
- Section 104 contains specific hearing requirements before an advance ruling is declared void.
- The power to regulate procedure cannot be used to override statutory rights or substantive provisions.
- The National Appellate Authority was added to Section 106 through the 2019 amendment framework effective from 1 January 2020.
Conclusion
Section 106 of the CGST Act provides the procedural flexibility required for the functioning of the advance ruling system. It empowers the Authority for Advance Ruling, Appellate Authority for Advance Ruling and National Appellate Authority for Advance Ruling to regulate their own procedure, while expressly making that power subject to the provisions of Chapter XVII.
The provision is short, but its practical importance is considerable. Advance ruling proceedings can involve different types of tax questions, documentary evidence, technical information and factual circumstances. Allowing the authorities to regulate their procedure helps them manage these proceedings efficiently while remaining within the statutory framework.
However, the phrase “regulate its own procedure” does not mean unlimited discretion. The authorities must continue to follow mandatory provisions of the CGST Act and applicable rules. For example, statutory requirements relating to applications, appeals, hearings, limitation periods and orders cannot simply be disregarded through procedural directions.
Section 106 also needs to be understood alongside Section 105. Section 105 gives the advance ruling authorities specified powers similar to those of a civil court for matters such as discovery, inspection, attendance, examination on oath and production of records. Section 106 then provides the broader authority to regulate the procedure through which the proceedings are conducted.
The National Appellate Authority was expressly incorporated into Section 106 through the amendments introduced by the Finance (No. 2) Act, 2019, effective from 1 January 2020. As a result, the current provision covers all three levels of the advance ruling framework: the Authority, the Appellate Authority and the National Appellate Authority.
For taxpayers, the practical lesson is that an advance ruling proceeding should be treated as a formal statutory proceeding. Applicants and appellants should follow the prescribed requirements, provide accurate information, respond to procedural directions and maintain proper supporting records.
In short, Section 106 gives procedural autonomy to the advance ruling authorities, but that autonomy operates within the boundaries of the CGST Act and Chapter XVII. It helps the authorities conduct proceedings effectively while preserving the statutory rights and obligations of the parties involved.
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