Section 95 of the Central Goods and Services Tax (CGST) Act, 2017 is the opening provision of Chapter XVII – Advance Ruling. It defines the important expressions used throughout the chapter dealing with advance rulings under GST.
An advance ruling provides a mechanism through which an eligible applicant can obtain a decision from the Authority for Advance Ruling or, where applicable, the Appellate Authority for Advance Ruling on specified questions relating to the supply of goods or services or both. Section 95 establishes the statutory meanings of terms such as advance ruling, Appellate Authority, applicant, application and Authority.
Understanding Section 95 is important because the subsequent provisions of Chapter XVII, including Sections 96, 97, 98, 99 and 100, use these expressions to determine who can apply, where the application is made, what questions can be asked and how an advance ruling is challenged.
What is Section 95 of the CGST Act?
Section 95 is titled “Definitions of Advance Ruling.”
The provision states that, unless the context otherwise requires, certain expressions used in Chapter XVII shall have the meanings assigned to them in Section 95.
Section 95 contains five important definitions:
- Advance ruling
- Appellate Authority
- Applicant
- Application
- Authority
These definitions provide the basic framework for understanding the advance ruling mechanism under GST.
Text and Structure of Section 95
Section 95 provides the following definitions:
- Advance ruling means a decision provided by the Authority or the Appellate Authority to an applicant on matters or questions specified under Section 97(2) or Section 100(1), concerning a supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.
- Appellate Authority means the Appellate Authority for Advance Ruling referred to in Section 99.
- Applicant means any person registered or desirous of obtaining registration under the CGST Act.
- Application means an application made to the Authority under Section 97(1).
- Authority means the Authority for Advance Ruling referred to in Section 96.
Each of these definitions has a specific role in the advance ruling process.
Definition of “Advance Ruling” under Section 95(a)
The first and most important definition under Section 95 is “advance ruling.”
An advance ruling means a decision provided by the Authority or the Appellate Authority to an applicant on matters or questions specified in Section 97(2) or Section 100(1), in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.
This definition contains several important elements.
1. It must be a decision of the prescribed authority
An advance ruling is not simply an opinion obtained from a tax consultant, Chartered Accountant, lawyer or GST practitioner.
It is a decision provided by the statutory Authority for Advance Ruling or, at the appellate stage, the Appellate Authority for Advance Ruling.
Therefore, the statutory advance ruling mechanism is different from an informal clarification or professional advice.
2. The question must fall within the permitted scope
Section 95 does not allow an applicant to ask any GST-related question whatsoever.
The definition specifically refers to questions specified in Section 97(2) or Section 100(1).
Section 97(2) specifies the questions on which an advance ruling may be sought, such as matters relating to classification, applicability of a notification, determination of time and value of supply, admissibility of input tax credit, liability to pay tax, requirement to be registered and whether a particular activity constitutes a supply.
The application therefore has to concern a question falling within the statutory scope of advance ruling.
3. It must relate to the applicant’s supply
The definition also connects the ruling with a supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.
This is an important limitation.
The advance ruling mechanism is not intended to provide a general opinion about the GST treatment of unrelated transactions of another person.
For example, if a registered business proposes to introduce a new service and wants to know the applicable classification or tax treatment, it may seek an advance ruling on a question falling within Section 97(2).
Definition of “Appellate Authority” – Section 95(b)
Section 95(b) defines “Appellate Authority” as the Appellate Authority for Advance Ruling referred to in Section 99.
The Appellate Authority is relevant when a person seeks to challenge an advance ruling issued by the Authority for Advance Ruling.
Section 99 deals with the constitution of the Appellate Authority for Advance Ruling.
Therefore, the structure broadly works as follows:
Authority for Advance Ruling → Advance Ruling → Appeal → Appellate Authority for Advance Ruling
This appellate mechanism is an important part of the advance ruling framework because an applicant or the concerned/jurisdictional officer may have the statutory right to appeal against an advance ruling in accordance with Section 100.
Definition of “Applicant” – Section 95(c)
Section 95(c) defines an “applicant” as:
Any person registered or desirous of obtaining registration under the Act.
This definition is particularly important because it explains who may approach the Authority for Advance Ruling.
The term is not restricted only to an already registered GST taxpayer.
A person who is desirous of obtaining registration can also fall within the definition of applicant.
Registered person as an applicant
A person who already holds GST registration may seek an advance ruling concerning a qualifying question relating to its supplies.
For example, a registered business may want clarification regarding:
- Classification of a product
- Applicability of a GST notification
- Eligibility for input tax credit
- Taxability of a proposed transaction
- Determination of value or time of supply
The particular question must still fall within the matters permitted under Section 97(2).
Person desirous of obtaining registration
Section 95(c) also covers a person who wants to obtain GST registration.
This means that the absence of an existing GST registration does not automatically prevent a person from being an applicant.
However, the person must satisfy the statutory requirements applicable to advance ruling and the question must fall within the permitted scope.
Definition of “Application” – Section 95(d)
Section 95(d) defines “application” as an application made to the Authority under Section 97(1).
Section 97 provides the procedure for seeking an advance ruling.
Under Section 97(1), an applicant desirous of obtaining an advance ruling may make an application in the prescribed form and manner, accompanied by the prescribed fee, stating the question on which the advance ruling is sought.
Therefore, an application is not merely a general letter requesting tax advice.
It is a formal statutory application submitted according to the prescribed procedure.
What should an application contain?
The application needs to clearly state the question on which the applicant seeks an advance ruling.
The question should be framed precisely because the Authority examines the matter within the scope prescribed under the CGST Act.
A poorly drafted question can make it difficult to determine the exact issue for which the ruling is being requested.
For practical purposes, an applicant should clearly explain:
- The nature of the business
- The relevant goods or services
- The proposed or existing transaction
- Relevant agreements or documents
- The GST issue involved
- The specific question on which the ruling is sought
- The applicant’s interpretation, where appropriate
- Supporting documents required under the prescribed procedure
Definition of “Authority” – Section 95(e)
Section 95(e) defines “Authority” as the Authority for Advance Ruling referred to in Section 96.
Section 96 provides that, subject to Chapter XVII, the Authority for Advance Ruling constituted under the relevant State Goods and Services Tax Act or Union Territory Goods and Services Tax Act is deemed to be the Authority for Advance Ruling for that State or Union territory for purposes of the CGST Act.
Thus, Section 95 and Section 96 operate together.
Section 95 tells us what the word Authority means, while Section 96 deals with the constitution and jurisdictional framework of that Authority.
Why are the Definitions in Section 95 Important?
Although Section 95 is a short provision, it is fundamental to the entire advance ruling chapter.
The subsequent provisions repeatedly use terms such as:
- Applicant
- Application
- Authority
- Advance ruling
- Appellate Authority
Without Section 95, the meaning and application of these expressions would be less clear.
For example, when Section 97 says that an applicant may make an application for an advance ruling, Section 95 tells us who qualifies as an applicant and what constitutes an application.
Similarly, when later provisions refer to an advance ruling or the Appellate Authority, Section 95 provides the basic statutory meaning of those expressions.
Section 95 and Section 96 – Difference
Sections 95 and 96 are closely connected but serve different purposes.
| Section | Main purpose |
|---|---|
| Section 95 | Defines important expressions used in Chapter XVII |
| Section 96 | Deals with the Authority for Advance Ruling |
| Section 97 | Deals with application for advance ruling |
| Section 98 | Deals with procedure on receipt of application |
| Section 99 | Deals with Appellate Authority for Advance Ruling |
| Section 100 | Deals with appeal to Appellate Authority |
| Section 101 | Deals with orders of Appellate Authority |
Section 95 therefore acts as the terminology foundation for the advance ruling provisions.
Section 95 and Section 97 – How They Work Together
Section 95 defines the applicant and application, while Section 97 provides the mechanism for making the application.
Under Section 97(1), an eligible applicant can apply in the prescribed form and manner and with the prescribed fee, stating the question on which the ruling is sought. Section 97(2) then specifies the types of questions that can be raised through an advance ruling application.
This means that merely being an applicant under Section 95 does not mean that every GST question can be submitted for an advance ruling.
The question itself must fall within the statutory list.
What Questions Can Generally Be Asked for an Advance Ruling?
Section 97(2) provides the permitted categories of questions.
These include questions relating to:
- Classification of goods or services or both
- Applicability of a notification issued under the CGST Act
- Determination of time and value of supply
- Admissibility of input tax credit
- Determination of liability to pay tax
- Whether the applicant is required to be registered
- Whether a particular act or activity amounts to or results in a supply of goods or services or both
These categories demonstrate why the definitions in Section 95 are important.
An applicant uses the formal application mechanism to obtain a ruling on a question that falls within the statutory scope of advance ruling.
Example of Section 95 in Practice
Suppose a registered manufacturer introduces a new product and is uncertain about its GST classification.
The manufacturer may qualify as an applicant under Section 95(c).
The manufacturer can submit an application under Section 97(1).
If the question concerns classification and falls within Section 97(2), the Authority may examine the application according to the prescribed procedure.
The decision provided by the Authority can constitute an advance ruling within the meaning of Section 95(a).
If an appeal is filed against that ruling in accordance with the Act, the matter can come before the Appellate Authority defined under Section 95(b).
This example shows how the five definitions fit together.
Another Example: Proposed Service
Consider a business planning to launch a specialised consulting service.
The business wants to determine the GST treatment of the proposed service before commencing the activity.
If the business is registered or is a person desirous of obtaining registration, it may fall within the definition of applicant.
It can submit an application under Section 97 if the question falls within the permitted categories.
The decision of the Authority, if issued within the statutory framework, constitutes an advance ruling.
Therefore, Section 95 provides the terminology required to understand the entire process.
Advance Ruling Is Different from General GST Advice
One important practical distinction is that an advance ruling under Section 95 is not the same as general professional advice.
A GST consultant may advise a business on how a transaction should be treated. Such advice may be useful for compliance, but it is not itself an advance ruling under Chapter XVII.
An advance ruling is a statutory decision provided by the Authority or Appellate Authority under the mechanism established by the CGST Act.
Therefore, businesses should not use the expression “advance ruling” for every GST clarification or professional opinion.
Advance Ruling Is Connected with a Specific Applicant and Supply
The wording of Section 95(a) is also significant because the ruling relates to a supply of goods or services or both undertaken or proposed to be undertaken by the applicant.
This makes the factual background of the transaction extremely important.
The applicant should therefore provide sufficient information about the actual or proposed transaction.
For example, information regarding:
- Product specifications
- Nature of services
- Contractual arrangements
- Pricing mechanism
- Customer location
- Supplier and recipient relationship
- Proposed business model
- Relevant invoices or agreements
may be important depending on the question being raised.
The more accurately the transaction is described, the easier it is for the Authority to understand the precise question.
Importance of Section 95 for GST Compliance
Advance rulings can be particularly relevant where a taxpayer faces uncertainty before entering into a transaction.
Businesses may have questions concerning classification, taxability, input tax credit, registration or the application of a notification.
The statutory advance ruling framework provides a formal mechanism for addressing qualifying questions.
However, the applicant must carefully examine the statutory requirements before filing an application. The definition in Section 95 is only the starting point; Sections 96 onwards contain the substantive procedural framework.
Key Features of Section 95
The major features of Section 95 can be summarised as follows:
| Provision | Meaning |
|---|---|
| Section 95(a) | Defines advance ruling |
| Section 95(b) | Defines Appellate Authority |
| Section 95(c) | Defines applicant |
| Section 95(d) | Defines application |
| Section 95(e) | Defines Authority |
| Chapter | Chapter XVII – Advance Ruling |
| Related provisions | Sections 96 onwards |
| Main purpose | Establishes terminology for the advance ruling mechanism |
Important Points to Remember
A few points should be kept in mind while studying Section 95:
1. Section 95 is a definition provision
It does not itself provide the complete procedure for obtaining an advance ruling.
The procedure must be read with subsequent provisions of Chapter XVII.
2. Applicant includes a person desirous of registration
The definition of applicant is not limited to persons who are already registered under GST.
3. An advance ruling must concern a permitted question
The definition itself refers to the matters specified in Section 97(2) and Section 100(1).
4. Application is a formal statutory process
An application under Section 95(d) means an application made to the Authority under Section 97(1).
5. Authority and Appellate Authority are statutory bodies
The expressions refer specifically to the authorities established or recognised under Sections 96 and 99.
6. The transaction must relate to the applicant
The definition of advance ruling connects the ruling with a supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.
Section 95 vs Other Important GST Provisions
| Provision | Subject |
|---|---|
| Section 95 | Definitions relating to advance ruling |
| Section 96 | Authority for Advance Ruling |
| Section 97 | Application for advance ruling |
| Section 98 | Procedure on receipt of application |
| Section 99 | Appellate Authority for Advance Ruling |
| Section 100 | Appeal to Appellate Authority |
| Section 101 | Orders of Appellate Authority |
| Section 101A | Appeal to Appellate Authority for Advance Ruling in certain cases, where applicable under the Act |
| Section 102 | Powers of Appellate Authority to amend its order |
| Section 103 | Applicability of advance ruling |
| Section 104 | Advance ruling to be void in certain circumstances |
| Section 105 | Powers of Authority and Appellate Authority |
| Section 106 | Procedure of Authority and Appellate Authority |
The definitions in Section 95 therefore provide the terminology used across this entire framework.
Practical Checklist Before Seeking an Advance Ruling
A taxpayer considering an advance ruling should first identify the exact GST issue.
A practical checklist can include:
- Determine whether the person qualifies as an applicant.
- Identify the exact supply involved.
- Establish whether the supply is existing or proposed.
- Identify the precise GST question.
- Check whether the question falls within Section 97(2).
- Collect agreements, invoices, product information and other relevant documents.
- Review applicable GST notifications and provisions.
- Prepare the application in the prescribed form and manner.
- Pay the prescribed fee.
- Ensure that the facts presented to the Authority are complete and accurate.
- Consider whether the same issue is already pending or decided under the statutory restrictions applicable to advance ruling proceedings.
This approach helps prevent an application from being framed as a general request for tax advice rather than a question falling within the advance ruling mechanism.
Frequently Asked Questions About Section 95 of the CGST Act
Conclusion
Section 95 of the CGST Act, 2017 provides the fundamental definitions for the advance ruling mechanism under GST. Although it is a short provision containing only five definitions, it establishes the meaning of the terms that are repeatedly used throughout Chapter XVII.
The provision defines an advance ruling as a statutory decision concerning specified questions relating to a supply undertaken or proposed to be undertaken by the applicant. It defines an applicant broadly enough to include a registered person as well as a person desirous of obtaining registration. It also establishes the meanings of application, Authority and Appellate Authority.
To understand the complete advance ruling mechanism, Section 95 should therefore be read together with Sections 96 onwards, particularly Section 97 dealing with the application for advance ruling and the provisions governing the Authority and appellate process.
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