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Advance Rulings - Service Tax Practice Manual / Ready Reckoner - Service TaxExtract Advance Rulings Meaning of Advance Ruling - 96A(a) advance ruling means the determination, by the Authority, of a question of law or fact specified in the application regarding the liability to pay service tax in relation to a service proposed to be provided, by the applicant; Who can file application for advance ruling - 96A(b) (i) (a) a non-resident setting up a joint venture in India in collaboration with a non-resident or a resident; or (b) a resident setting up a joint venture in India in collaboration with a non-resident; or (c) a wholly owned subsidiary Indian company, of which the holding company is a foreign company, who or which, as the case may be, proposes to undertake any business activity in India; (ii) a joint venture in India; or (iii) a resident falling within any such class or category of persons, as the Central Government may, by notification in the Official Gazette, specify in this behalf, and which or who, as the case may be, makes application for advance ruling under subsection (1) of section 96C ; By Notification no. 27/2009-ST, dated 20-8-2009 , Government of India has specified a public sector company for this purpose. Further vide Notification no. 4/2013-ST dated 1-3-2013 a resident public company limited company also included in list of advance ruling. Also by Notification No. 15/2014-ST dated 11-7-2014, the Central government has specified the resident private limited company for this purpose. Further vide Notification No. 09/2015-ST dated 01-03-2015 , the Central government has specified the resident firm for this purpose. Finance Act, 2007 has prescribed the meaning of joint venture in India . Accordingly, joint venture in India means a contractual arrangement whereby two or more persons undertake an economic activity which is subject to joint control and one or more of the participants or partners or equity holders is a non-resident having substantial interest in such arrangement. Advance ruling can not be obtained for existing business by a non-resident In MCDONALD'S INDIA PVT. LTD , it was held that the advance ruling can not be obtained for the existing business. A combined reading of the afore-mentioned provisions in the light of the scheme of the Act suggests that an applicant who is yet to commence his business activity can, if he so desires, avail the benefit of seeking advance ruling from the Authority on a question of law or fact regarding his liability to pay service tax in relation to a service proposed to be provided by him. Obviously, the benefit of seeking advance ruling from the Authority would not apply in the case of an ongoing business or undertaking which has already commenced the business Meaning of Non-Resident - 96A(e) non-resident , Indian company and foreign company have the meanings respectively assigned to them in clauses (30), (26) and (23A) of section 2 of the Income-tax Act, 1961 ; Application for advance ruling - Section 96C(1), (3) (4) Form of Application An applicant desirous of obtaining an advance ruling under this Chapter may make an application in Form AAR (ST) - Rule 3 of the Service Tax (Advance Ruling) Rules, 2003 Signature and Verification The application shall be signed and verified by the competent person prescribed in the rule 3 . Number of copies The application shall be made in quadruplicate. Fees The application shall be accompanied by a fee of ₹ 2500 /- (two thousand five hundred rupees.) Withdrawal of application An applicant may withdraw an application within thirty days from the date of the application. Procedural aspects Application can be presented in person or sent by registered post or courier or by speed post. The application will be received between 10 a.m. to 1 p.m. and from 2 p.m. to 5 p.m. on any working day at Hotel Samrat, 4 th Floor, Kautilaya Marg, Chanakyapuri, New Delhi-110021. If the applicant is not based in India, the applicant shall indicate in a separate annexure to the application, his postal e-mail address abroad and the name, address including e-mail address of his representative in india, if any, who is authorised to act on his behalf and to receive notices or other documents sent by the authority. Question that can be raised in the application for Advance Ruling - 96C (2) The question on which the advance ruling is sought shall be in respect of,- (a) classification of any service as a taxable service under Chapter V; (b) the valuation of taxable services for charging service tax; (c) the principles to be adopted for the purposes of determination of value of the taxable service under the provisions of Chapter V; (d) applicability of notifications issued under Chapter V; (e) admissibility of credit of duty or tax in terms of the rules made in this regard. (f) determination of the liability to pay service tax on a taxable service under the provisions of Chapter V The clause (f) has been inserted by the Finance Act, 2006 . Before such insertion the Authority was not having power to decide the issue of taxability of a service. Refer - Google online India (P) Ltd. (GIPL) reported in 2006 -TMI - 296 - Authority for Advance Ruling, New Delhi. In its decision the authority has observed that they are empowered to determine the classification of a service and a question as to whether a service provided by an applicant is a taxable service or not, cannot be subject matter of advance ruling under section 96(C)(2) . Now, this restriction has been removed and authority can decide the issue of taxability also. Further, the authority can accept the matter specified in the clauses (a) to (f) above. In these clauses there is no reference to circulars. Therefore, advance ruling authority is not empowered to decide the issue raised due to a circular issued by board. In IN RE: JASON JAMES CLEMENS reported in 2005 -TMI - 222 - AAR (New Delhi) . In this application the question was raised on the issue of applicability of service tax on the secondary services used in the primary services exported out of India and exempted by way of circular no. Circular No. 56/5/2003 [F. No. 254/1/2003-CX-4], dated 25-4-2003. It was held by the AAR that Advance Ruling cannot be sought on a question based on a circular issued by Board as a circular is not a notification within the meaning of clause (d) of sub-section (2) of Section 96 ibid on which reliance placed by applicant in seeking the Advance Ruling. Procedure on receipt of application - 96D Information from the Principal Commissioner of Central Excise or Commissioner of Central Excise to be sought On receipt of an application, the Authority shall cause a copy thereof to be forwarded to the Principal Commissioner of Central Excise or Commissioner of Central Excise and, if necessary, call upon him to furnish the relevant records: Where any records have been called for by the Authority in any case, such records shall, as soon as possible, be returned to the Principal Commissioner of Central Excise or Commissioner of Central Excise. Acceptance / Rejection of an application The Authority may, after examining the application and the records called for, by order, either allow or reject the application: Where the application is rejected, reasons for such rejection shall be given in the order. However no application shall be rejected under this sub-section unless an opportunity has been given to the applicant of being heard: Cases where application shall be rejected compulsorily (a) where the case is already pending in the applicant's case before any Central Excise Officer, the Appellate Tribunal or any Court; (b) where the case is the same as in a matter already decided by the Appellate Tribunal or any Court: Order of the Authority A copy of every order made shall be sent to the applicant and to the Principal Commissioner of Central Excise or Commissioner of Central Excise. Procedure after acceptance of an application Where an application is allowed, the Authority shall, after examining such further material as may be placed before it by the applicant or obtained by the Authority, pronounce its advance ruling on the question specified in the application. Personal hearing On a request received from the applicant, the Authority shall, before pronouncing its advance ruling, provide an opportunity to the applicant of being heard, either in person or through a duly authorised representative. Explanation: For the purposes of this sub-section, authorised representative' has the meaning assigned to it in sub-section (2) of section 35Q of the Central Excise Act, 1944 . Time Limit for pronouncement of Advance Ruling The Authority shall pronounce its advance ruling in writing within ninety days of the receipt of application. Order of the Advance Ruling A copy of the advance ruling pronounced by the Authority, duly signed by the Members and certified in the prescribed manner shall be sent to the applicant and to the Principal Commissioner of Central Excise or Commissioner of Central Excise, as soon as may be, after such pronouncement. Applicability (Binding nature) of advance ruling - 96E The advance ruling pronounced by the Authority under section 96D shall be binding only- (a) on the applicant who had sought it; (b) in respect of any matter referred to in sub-section (2) of section 96C ; (c) on the Principal Commissioner of Central Excise or Commissioner of Central Excise, and the Central Excise authorities subordinate to him, in respect of the applicant. Further, the advance ruling shall be binding as aforesaid unless there is a change in law or facts on the basis of which the advance ruling has been pronounced. Advance ruling to be void in certain circumstances - 96F Where the Authority finds, on a representation made to it by the Principal Commissioner of Central Excise or Commissioner of Central Excise or otherwise, that an advance ruling pronounced by it under sub-section ( 4) of section 96D has been obtained by the applicant by fraud or misrepresentation of facts, it may, by order, declare such ruling to be void ab initio and thereupon all the provisions of this Chapter shall apply (after excluding the period beginning with the date of such advance ruling and ending with the date of order under this sub-section) to the applicant as if such advance ruling had never been made. A copy of the order made, shall be sent to the applicant and the Principal Commissioner of Central Excise or Commissioner of Central Excise. Powers of Authority - 96G (1) The Authority shall, for the purpose of exercising its powers regarding discovery and inspection, enforcing the attendance of any person and examining him on oath, issuing commissions and compelling production of books of account and other records, have all the powers of a civil court under the Code of Civil Procedure, 1908. (2) The Authority shall be deemed to be a civil court for the purposes of section 195, but not for the purposes of Chapter XXVI of the Code of Criminal Procedure, 1973, and every proceeding before the Authority shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228, and for the purpose of section 196 of the Indian Penal Code. Procedure of Authority - 96H The Authority shall, subject to the provisions of this Chapter, have power to regulate its own procedure in all matters arising out of the exercise of its powers under this Act. Power of Central Government to make rules - 96I (1) The Central Government may, by notification in the Official Gazette, make rules for carrying out the provisions of this Chapter. (2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:- (a) the form and manner for making application under sub-section (1) of section 96C ; (b) the manner of certifying a copy of advanced ruling pronounced by the Authority under sub-section (7) of section 96D; (c) any other matter which, by this Chapter, is to be or may be prescribed. (3) Every rule made under this Chapter shall be laid, as soon as may be, after it is made, before each House of Parliament, while it is in session for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or both Houses agree that the rules should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule.
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