Section 96 of the Central Goods and Services Tax (CGST) Act, 2017 deals with the Authority for Advance Ruling. It establishes which authority is treated as the Authority for Advance Ruling for the purposes of the CGST Act in a particular State or Union territory.
The provision is part of Chapter XVII – Advance Ruling and should be read together with Sections 95, 97, 98, 99, 100 and the relevant provisions of the CGST Rules.
Section 95 provides the definitions used in the advance ruling chapter, while Section 96 identifies the authority that performs the advance ruling function. The application process is then governed principally by Section 97 and the subsequent provisions.
What is Section 96 of the CGST Act?
Section 96 is titled “Authority for advance ruling.”
The current statutory provision states:
“Subject to the provisions of this Chapter, for the purposes of this Act, the Authority for advance ruling constituted under the provisions of a State Goods and Services Tax Act or Union Territory Goods and Services Tax Act shall be deemed to be the Authority for advance ruling in respect of that State or Union territory.”
Thus, Section 96 creates a coordinated mechanism under which the Authority constituted under the applicable State GST Act or Union Territory GST Act is also treated as the Authority for Advance Ruling for CGST purposes in that State or Union territory.
Purpose of Section 96
The main purpose of Section 96 is to establish the jurisdictional Authority for Advance Ruling.
GST is a dual-tax system in which Central GST and State GST or Union Territory GST operate together. Instead of creating a completely separate authority only for CGST matters in every State and Union territory, Section 96 recognises the Authority constituted under the corresponding State GST Act or UTGST Act for advance ruling purposes.
This creates a common institutional framework for advance ruling matters within the relevant State or Union territory.
For example, when a taxpayer located in a particular State seeks an advance ruling under the GST law, the relevant State’s Authority for Advance Ruling functions within the statutory framework applicable to that State. The CGST Act deems that authority to be the Authority for Advance Ruling for CGST purposes in that State as well.
Exact Meaning of “Authority for Advance Ruling”
To understand Section 96, it is useful to connect it with Section 95.
Under Section 95(e), the expression “Authority” means the Authority for Advance Ruling referred to in Section 96.
Therefore:
Section 95 → Defines “Authority”
Section 96 → Identifies the Authority for Advance Ruling
Section 97 → Provides the application mechanism
This sequence makes Section 96 an important connecting provision within Chapter XVII.
How the Authority for Advance Ruling Is Constituted
Section 96 of the CGST Act currently uses a deeming mechanism rather than independently establishing a separate Central GST authority for every State and Union territory.
It provides that the Authority for Advance Ruling constituted under the relevant State GST Act or Union Territory GST Act is deemed to be the Authority for Advance Ruling for that State or Union territory for purposes of the CGST Act.
Therefore, the exact constitution and appointment framework of the authority is also connected with the corresponding State GST or UTGST law.
The CGST Rules separately prescribe qualifications and appointment-related requirements for members of the Authority. CBIC’s published Advance Ruling Authority Rules provide that the Central Government and State Government appoint officers having at least three years’ experience in the rank of Joint Commissioner as members of the Authority for Advance Ruling.
Composition of the Authority
The advance ruling framework was designed around participation by both Central and State tax administrations.
The CGST Rules provide for appointment of members from the tax administration and prescribe qualification and appointment requirements. CBIC’s rules specifically state that the Central Government and State Government shall appoint an officer having experience of not less than three years in the rank of Joint Commissioner as a member of the Authority for Advance Ruling.
This structure reflects the dual GST system because an advance ruling may have consequences under both the Central and State components of GST.
Why Both Central and State Tax Authorities Are Relevant
GST in India operates through a dual structure.
For an intra-State supply, Central GST and State GST generally apply together, subject to the applicable provisions. For an inter-State supply, Integrated GST applies.
Because advance rulings can concern questions such as classification, taxability, input tax credit, registration and liability to pay tax, the ruling mechanism needs to operate within this broader GST framework.
The advance ruling authority therefore functions within the relevant State or Union territory while being recognised for the purposes of the CGST Act through Section 96.
Section 96 and State GST Acts
The wording of Section 96 is particularly important because it refers to an Authority constituted under the provisions of a State Goods and Services Tax Act or Union Territory Goods and Services Tax Act.
This means that the provision should not be read as if the CGST Act alone creates an independent authority in every jurisdiction.
Instead, the CGST Act recognises the authority constituted under the corresponding State or Union Territory GST law.
This is one of the mechanisms through which the Central and State/Union Territory components of GST work together.
Section 96 and the Application for Advance Ruling
Section 96 does not itself provide the complete procedure for filing an advance ruling application.
That function is primarily dealt with by Section 97.
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.
The CGST Rules prescribe FORM GST ARA-01 for an application to the Authority for Advance Ruling. CBIC’s rules also prescribe a fee of ₹5,000 for the application, to be deposited in the manner specified under Section 49.
Therefore, the broad process can be understood as:
Eligible applicant → Application under Section 97 → Authority under Section 96 → Examination of application → Advance ruling under Section 98
What Questions Can Be Asked Before the Authority?
Section 96 identifies the authority, but the permissible questions are primarily specified under Section 97(2).
An applicant may seek an advance ruling on specified matters including:
- 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 activity amounts to or results in a supply of goods or services or both
The Authority therefore does not function as a general GST advisory body for every possible tax question. The question must fall within the statutory scope of advance ruling.
Example: Classification of Goods
Suppose a registered manufacturer introduces a new product and is uncertain about its GST classification.
The business may formulate a question concerning the classification of that product, provided the question satisfies the requirements of Section 97.
The application can be filed in the prescribed manner.
The relevant Authority for Advance Ruling in that State or Union territory will deal with the application under the advance ruling framework.
Thus, Section 96 determines which authority is recognised for this purpose, while Sections 97 and 98 govern the application and its consideration.
Example: Input Tax Credit
Consider a business that proposes to incur a particular expenditure and is uncertain whether the related input tax credit is admissible.
If the issue falls within Section 97(2), the taxpayer may seek an advance ruling.
The application is made to the relevant Authority for Advance Ruling.
The Authority then follows the statutory procedure under Section 98.
This illustrates how Section 96 works together with the other provisions of Chapter XVII rather than operating as an isolated provision.
Section 96 and Section 98
Section 98 deals with the procedure on receipt of an application.
After receiving an application, the Authority may forward a copy to the concerned officer and, where necessary, call for relevant records.
After examining the application and relevant records and hearing the applicant or authorised representative and the concerned officer or authorised representative, the Authority may admit or reject the application in accordance with Section 98.
Therefore, Section 96 identifies the authority, while Section 98 explains what the authority does after receiving an application.
When Can an Application Be Rejected?
Section 96 itself does not provide the detailed grounds for rejection of an advance ruling application.
Those matters are dealt with under Section 98.
Among other restrictions, the advance ruling mechanism does not operate as a forum for obtaining a second opinion where the same question is already pending or has already been decided in specified proceedings.
Therefore, an applicant should examine the statutory conditions under Section 98 before filing an application.
The role of Section 96 is to identify the competent Authority; it does not independently establish all admission or rejection conditions.
Section 96 and the Appellate Authority
The advance ruling system contains an appellate mechanism.
Section 95(b) defines the Appellate Authority as the Appellate Authority for Advance Ruling referred to in Section 99.
An applicant or the concerned officer may, subject to the statutory requirements, appeal against an advance ruling.
The appeal is made to the Appellate Authority for Advance Ruling under Section 100.
CBIC’s rules prescribe FORM GST ARA-2 for an appeal against an advance ruling and specify the applicable fee.
The structure can therefore be represented as:
Authority for Advance Ruling
↓
Advance Ruling
↓
Appeal, where permitted
↓
Appellate Authority for Advance Ruling
This is why Section 96 should be read together with Sections 99 and 100.
Section 96 and Applicability of Advance Ruling
Another important provision is Section 103.
An advance ruling pronounced by the Authority or Appellate Authority is generally binding on the applicant who sought it and on the concerned or jurisdictional officer in respect of that applicant, subject to the statutory conditions.
The binding effect is therefore not the same as a general nationwide ruling applicable automatically to every GST taxpayer.
Section 103 also provides that the advance ruling remains binding unless the law, facts or circumstances supporting the original ruling have changed.
This is an important practical point when understanding the purpose of the Authority established through Section 96.
Is an Advance Ruling Binding on Everyone?
No.
The statutory framework does not generally make an advance ruling universally binding on every taxpayer.
Section 103 specifies the persons on whom an advance ruling is binding.
Generally, it is binding on:
- The applicant who sought the ruling, in respect of the relevant matter; and
- The concerned or jurisdictional officer in respect of that applicant.
The statutory provision also states that the ruling remains binding unless the law, facts or circumstances supporting it change.
Therefore, taxpayers should not automatically assume that an advance ruling obtained by another business creates a binding determination for their own transactions.
Importance of Facts in an Advance Ruling
The factual background of an advance ruling is extremely important.
An advance ruling is issued in relation to the applicant’s particular question and the facts presented before the Authority.
If the underlying facts, business model, contractual arrangements or applicable law change, the legal position may also change.
This is consistent with Section 103, which recognises that an advance ruling remains binding unless the law, facts or circumstances supporting the ruling have changed.
Businesses should therefore maintain proper documentation of the facts and documents submitted with an advance ruling application.
Section 96 and GST Authorities – Comparison
| 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 102 | Rectification of advance ruling |
| 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 |
This sequence shows that Section 96 is essentially the provision that identifies the authority at the beginning of the advance ruling process.
Section 96 vs Section 99
Section 96 and Section 99 deal with two different authorities.
| Section 96 | Section 99 |
|---|---|
| Deals with Authority for Advance Ruling | Deals with Appellate Authority for Advance Ruling |
| First-level advance ruling mechanism | Appellate mechanism |
| Connected with Section 97 and Section 98 | Connected with Section 100 and Section 101 |
| Deals with the initial advance ruling process | Deals with appeal against an advance ruling |
The two should not be confused.
Section 96 vs Section 97
The distinction between Sections 96 and 97 is also straightforward.
Section 96: Identifies the Authority for Advance Ruling.
Section 97: Explains how an applicant seeks an advance ruling and the questions that may be raised.
In practical terms:
Who will decide? → Section 96
How do I apply and what can I ask? → Section 97
This makes both provisions important for a taxpayer considering an advance ruling.
Role of the Authority in GST Compliance
The advance ruling mechanism can help businesses obtain greater certainty about qualifying GST questions before or while undertaking a transaction.
For example, a business may need clarity regarding:
- Product classification
- Taxability
- Applicability of a notification
- Input tax credit
- Registration requirement
- Time or value of supply
A properly filed application allows the Authority to examine the question under the statutory framework.
However, businesses should remember that an advance ruling is not a substitute for general GST compliance. Businesses must continue to maintain records, issue appropriate documents, file returns and comply with applicable tax provisions.
Important Practical Points for Applicants
Before approaching the Authority for Advance Ruling, an applicant should carefully consider the following:
1. Identify the correct jurisdiction
The application should be made before the relevant Authority for Advance Ruling applicable to the State or Union territory concerned.
2. Clearly define the question
The question should fall within the categories permitted under Section 97(2).
3. Provide complete facts
The Authority needs sufficient information to understand the transaction and the issue involved.
4. Submit supporting documents
Agreements, invoices, product descriptions, business documents and other relevant records may be important depending on the nature of the question.
5. Check whether the question is already pending or decided
The applicant should examine the restrictions under Section 98 before filing.
6. Understand the binding effect
An advance ruling is not automatically binding on every taxpayer. Its binding effect is governed by Section 103.
Practical Example of Section 96
Suppose ABC Private Limited is registered in a State and intends to introduce a new service.
The company is uncertain about whether the service is taxable and wants an advance ruling.
The company:
- Identifies the relevant GST question.
- Checks whether the question falls within Section 97(2).
- Prepares the prescribed application.
- Pays the prescribed application fee.
- Files the application before the relevant Authority for Advance Ruling.
- The Authority examines the application under Section 98.
- The Authority pronounces its ruling if the application is admitted and the statutory procedure is completed.
Here, Section 96 identifies the Authority that deals with the advance ruling in the relevant State or Union territory.
Practical Example of a Person Planning Registration
Suppose an individual is planning to start a taxable business and is considering whether GST registration is required.
The person may fall within the definition of applicant under Section 95 if the person is desirous of obtaining registration.
If the question falls within Section 97(2), including the question of whether the applicant is required to be registered, the person may use the advance ruling mechanism subject to the applicable statutory conditions.
The relevant Authority is identified through Section 96.
Key Features of Section 96
The major features of Section 96 can be summarised as follows:
| Feature | Explanation |
|---|---|
| Chapter | Chapter XVII – Advance Ruling |
| Section | Section 96 |
| Subject | Authority for Advance Ruling |
| Main mechanism | Recognises the Authority constituted under the relevant State GST Act or UTGST Act |
| Jurisdiction | Relevant State or Union territory |
| Related provision | Section 95(e) |
| Application provision | Section 97 |
| Procedure | Section 98 |
| Appellate Authority | Section 99 |
| Appeal | Section 100 |
| Binding effect | Section 103 |
Why Section 96 Is Important
Section 96 may appear to be a short provision, but it is an essential part of the GST advance ruling framework.
Without knowing which authority is competent to issue the ruling, the application process under Section 97 cannot be properly understood.
The provision also reflects the dual structure of GST by linking the CGST advance ruling mechanism with the Authority constituted under the corresponding State GST or Union Territory GST law.
In practical terms, Section 96 answers a fundamental question:
Which Authority is recognised to provide an advance ruling for CGST purposes in a particular State or Union territory?
The answer is the Authority for Advance Ruling constituted under the relevant State Goods and Services Tax Act or Union Territory Goods and Services Tax Act, as deemed under Section 96.
👉 Read More → Section 99 – Appellate Authority for Advance Ruling
Frequently Asked Questions About Section 96 of the CGST Act
Conclusion
Section 96 of the CGST Act, 2017 establishes the institutional foundation for the GST advance ruling mechanism. It provides that 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 the purposes of the CGST Act.
The provision should be read together with Section 95, which defines the term “Authority,” Section 97, which deals with applications, and Section 98, which provides the procedure for dealing with those applications. The appellate framework is subsequently provided through Sections 99 and 100.
For taxpayers, Section 96 is important because it identifies the statutory authority through which qualifying GST questions can be considered under the advance ruling framework. The resulting ruling is then subject to the applicability and binding-effect provisions contained in Section 103 and other relevant provisions of the CGST Act.
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