Section 104 of CGST Act, 2017 – Advance Ruling to be Void in Certain Circumstances
Section 104 of CGST Act, 2017 – Advance Ruling to be Void in Certain Circumstances
Act: Central Goods and Services Tax Act, 2017
Chapter: XVII – Advance Ruling
Section Covered: Section 104
Effective From: 01st July 2017
🔎 Introduction
Section 104 of the CGST Act, 2017 provides that an advance ruling shall be declared void if it has been obtained by fraud, suppression of material facts, or misrepresentation.
While Section 103 makes advance ruling binding, Section 104 acts as a safeguard against misuse of the advance ruling mechanism.
This provision protects the revenue from abuse of process.
📜 Bare Provision – Section 104 (Key Highlights)
1️⃣ Where the Authority or Appellate Authority finds that an advance ruling was obtained by:
-
Fraud; or
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Suppression of material facts; or
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Misrepresentation of facts
It may, by order, declare such ruling as void ab initio.
2️⃣ Before declaring ruling void, opportunity of being heard must be given to the applicant.
3️⃣ Once declared void, all provisions of the Act shall apply to the applicant as if such advance ruling had never been made.
✅ Meaning in Simple Words
If a taxpayer:
❌ Conceals important facts
❌ Gives false information
❌ Misleads the Authority
to obtain favorable advance ruling —
Then the Authority can cancel (declare void) that ruling.
Once declared void:
➡ It is treated as if it never existed.
➡ Normal GST provisions apply retrospectively.
📌 Meaning of “Void Ab Initio”
“Void ab initio” means:
👉 Invalid from the beginning
👉 Treated as if never passed
This means:
• No protection of binding effect
• No immunity from tax liability
• Full proceedings may be initiated
⚖️ Grounds for Declaring Ruling Void
| Ground | Explanation |
|---|---|
| Fraud | Intentional deception |
| Suppression of facts | Concealment of material information |
| Misrepresentation | False or misleading statement |
The burden lies on authority to establish these elements.
🏛 Opportunity of Being Heard
Before declaring ruling void:
✔ Authority must give notice
✔ Applicant must be heard
✔ Principles of natural justice must be followed
Order without hearing may be challenged in High Court.
📖 Practical Illustration
Example 1 – Suppression of Facts
A taxpayer seeks advance ruling stating that supply is intra-state.
However, he intentionally hides that goods are delivered to another State.
Later discovered by department.
➡ Ruling may be declared void under Section 104.
Example 2 – Fraudulent Declaration
Applicant falsely claims that he is manufacturer while actually acting as intermediary.
Advance ruling obtained on wrong premise.
➡ Ruling can be cancelled.
🎯 Consequences of Declaration as Void
Once ruling is declared void:
✔ It loses binding effect
✔ Department can initiate proceedings
✔ Tax, interest, penalty may be imposed
✔ Limitation provisions apply as per law
It restores the situation as if ruling never existed.
⚖️ Judicial Perspective
Courts have held:
• Fraud vitiates all proceedings.
• Advance ruling obtained by suppression cannot be protected.
• Natural justice must be strictly followed before declaring void.
Fraud unravels everything.
🔄 Section 104 in Advance Ruling Framework
| Section | Subject |
|---|---|
| Section 103 | Binding nature |
| Section 104 | Void in certain cases |
| Section 105 | Powers of Authority |
Section 104 acts as corrective safeguard against misuse.
📌 Important Points to Remember
• Applicable only in cases of fraud/suppression/misrepresentation
• Hearing mandatory
• Ruling becomes void from beginning
• Normal GST provisions apply thereafter
• Protects revenue interest
❓ Frequently Asked Questions (FAQs) – Section 104 CGST
Q1. When can advance ruling be declared void?
If obtained by fraud, suppression, or misrepresentation.
Q2. Is hearing required before cancellation?
Yes.
Q3. What does void ab initio mean?
Invalid from the beginning.
Q4. Can department reopen case after ruling declared void?
Yes.
Q5. Is every mistake covered?
No. Only fraud or deliberate concealment.
Q6. Does rectification under Section 102 apply here?
No. This is cancellation, not correction.
Q7. Can taxpayer challenge void order?
Yes, through writ jurisdiction.
Q8. Does limitation period revive?
Yes, as per applicable GST provisions.
Q9. Is intent important?
Yes, fraud or suppression must be established.
Q10. Why is Section 104 important?
Because it prevents misuse of advance ruling mechanism.
📝 Conclusion
Section 104 of the CGST Act, 2017 ensures that the advance ruling system is not misused by taxpayers through fraudulent or misleading disclosures. It empowers the Authority to declare such rulings void from inception while safeguarding principles of natural justice.
This provision maintains integrity, transparency, and fairness within the GST advance ruling framework.
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