What an Advance Ruling Cannot Decide

Advance Ruling Cannot Decide explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

The mechanism is genuinely useful for what it covers. Knowing what it does not cover saves the fee, the months, and — more importantly — an adverse observation on a question that was never properly before the Authority.

Section 97(2) is an exhaustive list of seven subjects, and s.95(a) confines a ruling to a supply being undertaken or proposed to be undertaken by the applicant. Outside them sit: place of supply, whether a supply is an export or a zero-rated supply, refund entitlement and quantum, another person's liability, the validity or vires of a notification, procedural and computational questions, and factual disputes about a past period already under proceedings.

Place of supply: the largest exclusion

Place of supply is not one of the seven clauses. It is not classification, not applicability of a notification, not time and value, not credit, not liability on goods or services, not registration, and not whether something amounts to a supply.

Advance Ruling Authorities have consistently declined place-of-supply questions on that basis, and the reasoning is textual: the legislature listed seven subjects and place of supply is not among them.

Why it matters so much. Place of supply decides:

• whether a supply is intra-State or inter-State, and therefore CGST+SGST or IGST;
• whether a service is an export under s.2(6) of the IGST Act;
• whether a supply to an SEZ is zero-rated;
• jurisdiction for registration and compliance.

These are exactly the questions on which businesses most want certainty, and the mechanism does not reach them.

The exception worth knowing: section 101C

The National Appellate Authority route, where operative, is a partial answer to the divergence problem rather than to the place-of-supply problem.

Section 101A(1A), inserted by the Finance Act, 2026 w.e.f. 01.04.2026, provides that until the National Appellate Authority is constituted under s.101A(1), the Government may, on the Council's recommendations, by notification empower any existing Authority — and the Explanation states that "existing Authority" includes a Tribunal — to hear appeals under s.101B; in which case sub-sections (2) to (13) do not apply and references to the National Appellate Authority are read as references to that Authority.

Section 101B exists to resolve conflicting rulings by Appellate Authorities of different States on the same question, for distinct persons. And s.103(1A) gives a National Appellate Authority ruling a wider binding effect — on the applicants and all registered persons having the same PAN, and on their officers.

So the mechanism addresses conflict between States, not the subject-matter boundary of s.97(2). The empowered Tribunal as NAAAR →

The other exclusions

Whether a supply is an export or zero-rated. Because that depends on place of supply under IGST s.13, and on the conditions in s.2(6) IGST — including receipt of payment in convertible foreign exchange and the supplier and recipient not being merely establishments of a distinct person.

Refund entitlement or quantum. Refunds are governed by s.54 and Rules 89 to 97. No clause of s.97(2) covers them. A question framed as "whether the applicant is entitled to refund of accumulated credit" is outside the jurisdiction; a question about admissibility of the credit itself under clause (d) is within it.

Another person's liability. Section 95(a) confines the ruling to the applicant's own supply. A recipient's question about the vendor's rate is not maintainable as framed, though the credit consequence is.

Validity or vires of a notification. Clause (b) covers applicability, not validity. A challenge to a notification is a matter for the writ jurisdiction.

Procedural and computational questions. How to file a return, how to report a transaction in GSTR-1, which table of GSTR-9 an item belongs in, how to compute interest. None is within the seven clauses.

Constitutional questions. Outside the Authority's jurisdiction entirely.

Questions already pending or decided. The first proviso to s.98(2) bars admission where the question raised is already pending or decided in any proceedings in the applicant's case under any provision of the Act. The admission bar →

The other reasons an application is a bad idea even when it fits

A ruling binds only the applicant. Section 103(1) — binding only on the applicant and on the concerned or jurisdictional officer in respect of the applicant. So an adverse ruling is a problem for you, while a favourable one helps nobody else. Section 103 →

An adverse ruling is worse than silence. Before the ruling, the position is arguable. After it, the department has a ruling binding on the applicant and the applicant is obliged to follow it. The only route out is an appeal under s.100 or a change of law, facts or circumstances under s.103(2).

It draws attention. The application goes to the concerned officer and the jurisdictional officer under s.98(1), which puts the issue and the period squarely on their file.

Rulings diverge across States. Different AARs have reached different conclusions on similar facts. A favourable ruling in one State does not protect a group's other registrations.

It takes time. Ninety days for the AAR under s.98(6), and ninety days for the AAAR under s.101(2) — periods that are directory in practice, and often exceeded.

When it is worth doing

Despite all of that, there are situations where an advance ruling is clearly the right tool:

• a new product whose classification is genuinely arguable and which will be sold for years;
• a new business model where the question is whether something amounts to a supply at all;
• a large prospective transaction where the tax on one view is material and the counterparty needs certainty before signing;
• a foreign entity deciding whether it is required to register in India;
• an exemption notification whose conditions are arguable on the applicant's facts.

The common thread: the question is prospective, squarely within a clause, material, and not already under proceedings. When to seek a ruling →

Key takeaways

• Place of supply is not within s.97(2) — and with it go export status and zero-rating questions.
• Refund entitlement and quantum are outside; credit admissibility is inside.
• A ruling covers the applicant's own supply only.
• Clause (b) covers applicability of a notification, not its validity.
• Procedural, computational and constitutional questions are outside.
• A ruling binds only the applicant — so an adverse one is a liability and a favourable one is not a precedent.

Read next

• Section 97(2): The Seven Questions You Can Actually Ask
• Section 103: Binding Only on the Applicant
• When to Seek an Advance Ruling, and When Not To
• Section 98(2): "Already Pending or Decided" — the Admission Bar

Disclaimer: Positions stated as on 5 September 2026, based on the CGST Act and Rules as amended to 31 March 2026 (ICAI Bare Law, 12th edition). Positions of Advance Ruling Authorities are stated in general terms; individual rulings turn on their own facts and are not binding beyond the applicant.