Section 97 of the Central Goods and Services Tax (CGST) Act, 2017 deals with the application for advance ruling. It explains how an eligible applicant can approach the Authority for Advance Ruling and, importantly, identifies the specific questions on which an advance ruling can be sought.
Section 97 is part of Chapter XVII – Advance Ruling and works together with Sections 95 and 96. Section 95 defines important terms used in the advance ruling chapter, Section 96 identifies the Authority for Advance Ruling, and Section 97 provides the legal basis for making an application.
For a business, Section 97 can be useful where there is genuine uncertainty about the GST treatment of a proposed or ongoing supply, such as its classification, taxability, input tax credit eligibility, registration requirement, or whether a particular activity constitutes a supply.
What is Section 97 of the CGST Act?
Section 97 is titled “Application for advance ruling.”
The section contains two main parts:
- Section 97(1) explains how an applicant may make an application for advance ruling.
- Section 97(2) specifies the questions on which an advance ruling may be sought.
Section 97(1) provides that 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.
Section 97(2) then limits the scope of questions that can be raised.
Therefore, Section 97 is not simply a provision allowing a taxpayer to ask any GST-related question. The question must fall within one of the categories specifically listed in Section 97(2).
Purpose of Section 97
The main purpose of Section 97 is to provide a formal statutory route through which an eligible person can seek an advance ruling on specified GST questions.
GST provisions can sometimes create uncertainty regarding:
- Classification of goods or services
- Applicability of a notification
- Time of supply
- Value of supply
- Input tax credit
- Liability to pay GST
- Requirement of GST registration
- Whether an activity amounts to a supply
Section 97 allows such qualifying questions to be placed before the Authority for Advance Ruling.
However, the mechanism is subject to the conditions and limitations contained in Chapter XVII.
Section 97(1) – Making an Application for Advance Ruling
Section 97(1) states that an applicant desirous of obtaining an advance ruling may make an application:
- In the prescribed form;
- In the prescribed manner;
- Along with the prescribed fee; and
- Stating the question on which the advance ruling is sought.
This means that an advance ruling application is a formal statutory application and not merely a request for an informal clarification from the GST department.
Who Can Make the Application?
Section 95(c) defines an applicant as a person who is registered or desirous of obtaining registration under the CGST Act.
Therefore, an applicant does not necessarily have to already possess a GST registration.
However, the applicant must satisfy the applicable statutory requirements and the question must fall within Section 97(2).
Form for Application for Advance Ruling
Rule 104 of the CGST Rules prescribes the form and manner of making an application.
Under Rule 104, an application for obtaining an advance ruling under Section 97(1) is made on the common portal in FORM GST ARA-01.
The application is accompanied by a fee of ₹5,000, to be deposited in the manner specified under Section 49. The application, verification and relevant accompanying documents are required to be signed in the prescribed manner.
Therefore, the basic application framework can be understood as:
Section 97(1) → Statutory right to apply
Rule 104 → Form and manner
FORM GST ARA-01 → Application
Prescribed fee → ₹5,000
What Should an Advance Ruling Application Contain?
The prescribed FORM GST ARA-01 requires information that helps the Authority understand the applicant, business activity and question involved.
The form includes details such as:
- GSTIN, where applicable
- Legal name
- Trade name, where applicable
- Registered or other relevant address
- Contact details
- Jurisdictional authority
- Authorised representative, where applicable
- Nature of the present or proposed activity
- Description of the activity
- Issue or issues on which advance ruling is required
- Facts relevant to the question
- Applicant’s interpretation of the relevant provisions
- Grounds for the application
- Supporting documents
The prescribed form therefore encourages the applicant to present the transaction and the legal question in a structured manner.
Section 97(2) – Questions on Which Advance Ruling Can Be Sought
Section 97(2) is the most important part of the provision because it specifies the questions for which an advance ruling may be sought.
There are seven categories:
- Classification of goods or services or both
- Applicability of a notification
- 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
Each category is discussed below.
1. Classification of Goods or Services
Under Section 97(2)(a), an applicant may seek an advance ruling regarding the classification of any goods or services or both.
Classification is important because the classification of a product or service can affect:
- Applicable GST rate
- Relevant HSN or SAC
- Applicability of exemptions
- Notification-based benefits
- Tax treatment
- Compliance requirements
Example
Suppose a manufacturer develops a specialised product and is uncertain about the appropriate GST classification.
If the question falls within the statutory requirements, the manufacturer may seek an advance ruling on the classification of the product.
The application should explain the product’s characteristics, composition, use, manufacturing process and other relevant facts.
The Authority can then consider the classification question within the advance ruling framework.
2. Applicability of a GST Notification
Section 97(2)(b) permits an applicant to seek an advance ruling regarding the applicability of a notification issued under the CGST Act.
GST contains numerous notifications dealing with matters such as:
- Exemptions
- Tax rates
- Conditions for exemptions
- Special categories of supplies
- Other statutory concessions or requirements
A business may sometimes be uncertain whether a particular notification applies to its transaction.
Example
Suppose a taxpayer provides a particular category of service and believes that an exemption notification may apply.
The taxpayer may seek an advance ruling on whether the relevant notification applies to the facts and circumstances of its proposed or ongoing supply, subject to the statutory requirements.
The application should clearly identify the notification and explain why the applicant believes it may apply.
3. Determination of Time and Value of Supply
Section 97(2)(c) permits an advance ruling on the determination of the time and value of supply of goods or services or both.
Time of supply determines when GST liability arises, while value of supply determines the amount on which GST may be calculated.
These matters can be particularly important where a transaction involves:
- Multiple payments
- Advance payments
- Discounts
- Reimbursements
- Related-party transactions
- Complex contractual arrangements
- Continuous supplies
- Special valuation provisions
Example
A business enters into a complex service contract under which payments are made at different stages.
If the taxpayer needs a ruling on the applicable time or value of supply and the question falls within Section 97(2), the taxpayer may apply for an advance ruling.
4. Admissibility of Input Tax Credit
Section 97(2)(d) permits an applicant to seek an advance ruling regarding the admissibility of input tax credit of tax paid or deemed to have been paid.
Input tax credit is an important component of GST compliance.
A business may have questions regarding whether GST paid on a particular inward supply can qualify for ITC, subject to the conditions and restrictions under the CGST Act.
Example
Suppose a company purchases a specialised service that it uses for its taxable business activities.
The company is uncertain whether the corresponding GST qualifies for input tax credit.
If the question falls within Section 97(2)(d), the company may seek an advance ruling regarding the admissibility of that ITC.
The applicant should provide complete details about:
- Nature of the inward supply
- Business use
- Supplier
- Invoice
- Payment
- Relevant contractual terms
- Other facts necessary to determine eligibility
5. Determination of Liability to Pay Tax
Section 97(2)(e) allows an applicant to seek an advance ruling regarding the determination of the liability to pay tax on any goods or services or both.
This provision can be relevant where the taxpayer is uncertain whether GST is payable on a particular supply.
Example
A business introduces a new service for its customers.
The business wants to determine whether the transaction is subject to GST.
If the question falls within the statutory scope, the applicant can seek an advance ruling on its liability to pay tax.
The Authority will examine the question based on the facts and applicable law.
6. Whether the Applicant Is Required to Be Registered
Section 97(2)(f) permits an applicant to seek an advance ruling on whether the applicant is required to be registered under GST.
This can be important for businesses that are uncertain about their registration obligations.
Registration requirements can depend on factors such as:
- Nature of business
- Aggregate turnover
- Type of supply
- Place of supply
- Special categories of persons
- Other provisions requiring registration
Example
Suppose a person is starting a business and is uncertain whether GST registration is mandatory.
The person may seek an advance ruling on the registration requirement, provided the application satisfies the provisions of Chapter XVII.
The definition of applicant under Section 95 is also relevant because it includes a person desirous of obtaining registration.
7. Whether an Activity Amounts to or Results in a Supply
Section 97(2)(g) permits an applicant to seek an advance ruling on whether a particular thing done by the applicant with respect to goods or services or both amounts to or results in a supply within the meaning of the GST law.
This is an important category because the concept of “supply” is central to GST.
Example
Suppose a company transfers goods or provides a service under a particular business arrangement and is uncertain whether that activity constitutes a supply under GST.
If the question falls within Section 97(2)(g), the applicant may seek an advance ruling.
The facts of the transaction and the relevant statutory provisions would need to be clearly presented.
Seven Questions Covered by Section 97(2)
The complete list can be summarised as follows:
| Clause | Question that can be raised |
|---|---|
| 97(2)(a) | Classification of goods or services or both |
| 97(2)(b) | Applicability of a notification issued under the CGST Act |
| 97(2)(c) | Determination of time and value of supply |
| 97(2)(d) | Admissibility of input tax credit |
| 97(2)(e) | Determination of liability to pay tax |
| 97(2)(f) | Whether the applicant is required to be registered |
| 97(2)(g) | Whether a particular activity amounts to or results in a supply |
These seven categories define the substantive scope of questions that can be brought before the Authority under Section 97.
Section 97 Does Not Allow Every GST Question
One of the most important points about Section 97 is that an advance ruling cannot be sought on every GST issue simply because the applicant wants clarification.
The question must fit within one of the categories specified in Section 97(2).
For example, a taxpayer cannot treat the advance ruling mechanism as a general consultancy service covering every possible GST compliance matter.
The application must identify a specific statutory question within the permitted scope.
Section 97 and Section 98
Section 97 deals with making the application, while Section 98 deals with what happens after the application is received.
After receiving an application, the Authority forwards a copy to the concerned officer and may call for relevant records.
The Authority can then examine the application and records and hear the applicant or authorised representative and the concerned officer or authorised representative before deciding whether to admit or reject the application.
An important restriction under Section 98 is that an application cannot be admitted where the question raised is already pending or has already been decided in proceedings in the applicant’s case under the CGST Act.
Therefore:
Section 97 → Filing the application
Section 98 → Examination, admission/rejection and ruling
Why Section 98 Matters When Filing Under Section 97
An applicant should not look at Section 97 in isolation.
Before filing an application, it is important to determine whether the question is already pending or decided in proceedings involving the applicant.
Section 98 specifically prevents admission where the question raised is already pending or has already been decided in proceedings in the applicant’s case under the Act. The applicant must also be given an opportunity of being heard before an application is rejected.
This makes a pre-filing review important.
Section 97 and the Prescribed Fee
The CGST Rules prescribe a fee of ₹5,000 for an application for advance ruling.
Rule 104 provides that the application is made on the common portal in FORM GST ARA-01 and is accompanied by the prescribed fee.
The fee is separate from the fee prescribed for an appeal against an advance ruling.
For comparison, Rule 106 provides a ₹10,000 fee for an applicant’s appeal in FORM GST ARA-02.
Application for Advance Ruling – Practical Process
The process can broadly be understood in the following stages:
Step 1: Identify the GST issue
The applicant should first identify the precise transaction and legal question.
Step 2: Check Section 97(2)
The applicant should determine whether the question falls within one of the seven categories listed in Section 97(2).
Step 3: Check Section 98 restrictions
The applicant should verify that the question is not already pending or decided in proceedings in the applicant’s case under the Act.
Step 4: Prepare the application
The applicant prepares the application in the prescribed form and manner.
Step 5: File FORM GST ARA-01
The application is filed on the common portal as prescribed under Rule 104.
Step 6: Pay the prescribed fee
The prescribed application fee of ₹5,000 is paid in the manner specified under the rules.
Step 7: Provide relevant facts and documents
The applicant should provide sufficient factual and documentary material to explain the transaction and the question.
Step 8: Authority examines the application
The Authority proceeds under Section 98 after receiving the application.
Importance of Clearly Framing the Question
The wording of the question is particularly important.
Section 97(1) requires the applicant to state the question on which the advance ruling is sought.
The question should therefore be precise rather than broad or vague.
Weakly framed question
“Please tell us the GST applicable to our business.”
This is too broad to clearly identify a particular statutory issue.
Better framed question
“Whether the specified service proposed to be supplied by the applicant is liable to GST under the applicable provisions?”
The exact wording will depend on the facts and legal issue, but the principle is important: the application should identify the specific question for which a ruling is sought.
Importance of Providing Complete Facts
An advance ruling depends heavily on the factual background of the transaction.
The applicant should therefore clearly explain:
- What goods or services are involved
- Who supplies them
- Who receives them
- How the transaction is structured
- What consideration is involved
- How the goods or services are used
- Relevant contractual arrangements
- Existing or proposed business activity
- The precise GST question
Supporting documents should be attached wherever relevant.
A clear factual presentation helps the Authority understand the exact issue being placed before it.
Example: Product Classification
A manufacturer produces a specialised machine component.
The manufacturer is uncertain about the correct classification of the product for GST purposes.
The manufacturer can examine Section 97(2)(a), which specifically covers classification.
If the statutory requirements are satisfied, the manufacturer can submit FORM GST ARA-01 and seek an advance ruling on the classification.
The Authority then considers the application under Section 98.
Example: GST Exemption Notification
A service provider believes that a particular service may qualify for an exemption under a GST notification.
The applicant can examine Section 97(2)(b), which covers the applicability of a notification issued under the CGST Act.
The application should identify the notification and explain the facts of the proposed or existing supply.
Example: Input Tax Credit
A company purchases a service used in its taxable business.
The company is uncertain whether the GST paid on that service is eligible for ITC.
This question may fall under Section 97(2)(d), relating to admissibility of input tax credit.
The company can make an application subject to the requirements of Chapter XVII.
Example: Registration Requirement
A person proposes to start a taxable business and is uncertain whether GST registration is mandatory.
Section 97(2)(f) specifically covers the question of whether the applicant is required to be registered.
The person can consider seeking an advance ruling if the statutory conditions are satisfied.
This is also consistent with Section 95(c), which includes a person desirous of obtaining registration within the definition of applicant.
Example: Whether an Activity Is a Supply
Suppose a business proposes to transfer certain goods or provide a facility to another person under a particular arrangement.
The business is uncertain whether the activity constitutes a supply under GST.
Section 97(2)(g) specifically covers whether a particular thing done by the applicant with respect to goods or services or both amounts to or results in a supply.
The applicant can therefore examine this provision before deciding whether an advance ruling application is appropriate.
Section 97 and Advance Ruling for Proposed Activities
The advance ruling definition in Section 95 covers supplies being undertaken or proposed to be undertaken by the applicant.
Therefore, the mechanism is not limited only to transactions that have already been completed.
This can make advance ruling particularly relevant when a business is planning a new product, service or transaction and wants to obtain a ruling on a qualifying GST question before proceeding.
However, the specific facts and question must still satisfy the requirements of Chapter XVII.
Section 97 vs General GST Clarification
| Advance Ruling under Section 97 | General GST Advice |
|---|---|
| Statutory mechanism | Professional or informal advice |
| Application filed in prescribed form | No statutory advance ruling application |
| Prescribed fee | Depends on advisor/service |
| Question must fall under Section 97(2) | May cover broader advisory issues |
| Considered by Authority for Advance Ruling | Given by consultant/advisor or other source |
| Governed by Chapter XVII | Not necessarily governed by Chapter XVII |
| Binding effect governed by Section 103 | Professional advice itself is not an advance ruling |
This distinction is important because the term “advance ruling” has a specific statutory meaning under GST.
Section 97 vs Section 100
Section 97 deals with the initial application for an advance ruling.
Section 100 deals with the appeal against an advance ruling.
| Section 97 | Section 100 |
|---|---|
| Application for advance ruling | Appeal to Appellate Authority |
| Initial stage | Appellate stage |
| FORM GST ARA-01 | Applicant’s appeal through FORM GST ARA-02 |
| Application fee ₹5,000 | Applicant appeal fee ₹10,000 |
| Authority for Advance Ruling | Appellate Authority for Advance Ruling |
The rules prescribe the respective forms and fees.
Section 97 and the Binding Effect of Advance Ruling
The question asked under Section 97 is important because the resulting advance ruling has a statutory binding effect under Section 103.
Section 103 provides that an advance ruling is binding on the applicant who sought it in respect of the relevant matter and on the concerned or jurisdictional officer in respect of that applicant.
The ruling remains binding unless the law, facts or circumstances supporting the original ruling have changed.
Therefore, an applicant should present the facts accurately and completely when filing an application under Section 97.
What Happens After Filing the Application?
Filing the application does not immediately mean that the applicant receives an advance ruling.
The application goes through the procedure prescribed under Section 98.
The Authority may examine the application and relevant records, hear the applicant or authorised representative and the concerned officer or authorised representative, and decide whether the application should be admitted or rejected.
If admitted, the Authority proceeds to pronounce its advance ruling on the question specified in the application.
Authority’s Time Limit for Advance Ruling
Section 98(6) provides that the Authority shall pronounce its advance ruling in writing within 90 days from the date of receipt of the application.
The signed and certified ruling is then sent to the applicant, the concerned officer and the jurisdictional officer as provided in Section 98(7).
Thus, Section 97 starts the process, while Section 98 establishes the subsequent procedure and timeline.
Key Documents Related to Section 97
The principal documents associated with an advance ruling application include:
| Document | Purpose |
|---|---|
| FORM GST ARA-01 | Application for advance ruling by applicant |
| Supporting documents | Evidence and explanation of transaction |
| FORM GST ARA-02 | Applicant’s appeal against advance ruling |
| FORM GST ARA-03 | Appeal by concerned/jurisdictional officer |
| Advance ruling | Decision issued by Authority |
Rule 104 specifically prescribes FORM GST ARA-01 and the application fee. Rule 106 deals with appeals against advance rulings.
Common Mistakes While Applying for Advance Ruling
An applicant should avoid several practical mistakes.
Asking a question outside Section 97(2)
The advance ruling mechanism is limited to the questions listed in Section 97(2).
Providing incomplete facts
The Authority needs to understand the transaction on which the question is based.
Using an overly broad question
The question should be specific enough to identify the precise legal issue.
Ignoring Section 98 restrictions
The applicant should check whether the same question is already pending or decided in proceedings in the applicant’s case.
Treating advance ruling as general consultancy
An advance ruling is a statutory decision and should not be confused with an informal GST opinion.
Failing to preserve supporting documents
Contracts, invoices, product details, technical information and other documents can be important for establishing the facts.
Key Features of Section 97
The major features of Section 97 can be summarised as follows:
| Particular | Details |
|---|---|
| Section | 97 |
| Chapter | XVII – Advance Ruling |
| Subject | Application for advance ruling |
| Subsections | 2 |
| Application form | FORM GST ARA-01 |
| Application fee | ₹5,000 |
| Authority | Authority for Advance Ruling |
| Main condition | Question must fall under Section 97(2) |
| Main categories | Seven |
| Related procedure | Section 98 |
| Appeal provision | Section 100 |
The form and fee are prescribed under Rule 104 of the CGST Rules.
Seven Categories Under Section 97(2) at a Glance
For quick revision, the seven permissible categories are:
1. Classification
Classification of goods or services or both.
2. Notification
Applicability of a notification issued under the CGST Act.
3. Time and Value
Determination of time and value of supply.
4. Input Tax Credit
Admissibility of input tax credit of tax paid or deemed to have been paid.
5. Tax Liability
Determination of liability to pay tax.
6. Registration
Whether the applicant is required to be registered.
7. Supply
Whether a particular activity amounts to or results in a supply of goods or services or both.
These categories are expressly provided in Section 97(2).
👉 Read More → Section 98 – Procedure on receipt of application
Why Section 97 Is Important for GST Taxpayers
Section 97 provides taxpayers with a formal mechanism to seek clarity on certain GST questions.
Instead of waiting until a dispute arises after a transaction, an eligible applicant can use the advance ruling framework for a qualifying question concerning an existing or proposed supply.
This can be particularly relevant for businesses dealing with new products, complex services, unusual transaction structures, uncertain ITC positions or questions concerning GST registration.
However, the usefulness of the mechanism depends on correctly identifying a question covered by Section 97(2), accurately presenting the facts and complying with the procedural requirements of Chapter XVII.
Conclusion
Section 97 of the CGST Act, 2017 provides the statutory framework for making an application for advance ruling. Under Section 97(1), an eligible applicant may apply in the prescribed form and manner, with the prescribed fee, while clearly stating the question on which the ruling is sought. Rule 104 prescribes FORM GST ARA-01 and a ₹5,000 application fee.
The most important part of Section 97 is subsection (2), which limits advance ruling questions to seven specified areas: classification, applicability of notifications, time and value of supply, admissibility of input tax credit, liability to pay tax, registration requirement, and whether a particular activity constitutes a supply.
Section 97 should be read with Section 98 because filing an application does not automatically result in a ruling. The Authority examines the application and relevant records and follows the admission and ruling procedure prescribed under the Act.
For taxpayers, the practical importance of Section 97 lies in its ability to provide a formal route for obtaining an advance ruling on a clearly defined GST question relating to a supply that is being undertaken or proposed to be undertaken.
Frequently Asked Questions About Section 97 of the CGST Act
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