Section 95 of CGST Act, 2017 – Definitions (Advance Ruling)
📘 Section 95 of CGST Act, 2017 – Definitions (Advance Ruling)
Act: Central Goods and Services Tax Act, 2017
Chapter: XVII – Advance Ruling
Section Covered: Section 95
Effective From: 01st July 2017
🔎 Introduction
Section 95 of the CGST Act, 2017 provides the definitions applicable to the provisions relating to Advance Ruling under GST.
This section forms the foundation of Chapter XVII and clarifies the meaning of important terms such as:
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Advance Ruling
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Applicant
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Application
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Authority
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Appellate Authority
Understanding Section 95 is essential before proceeding to Sections 96 to 106 dealing with the Advance Ruling mechanism.
📜 Bare Provision – Section 95
For the purposes of this Chapter, unless the context otherwise requires:
(a) “Advance Ruling”
Means a decision provided by the Authority or the Appellate Authority to an applicant on matters or on questions specified in sub-section (2) of Section 97 or sub-section (1) of Section 100, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant.
(b) “Applicant”
Means any person registered or desirous of obtaining registration under this Act.
(c) “Application”
Means an application made to the Authority under sub-section (1) of Section 97.
(d) “Authority”
Means the Authority for Advance Ruling constituted under Section 96.
(e) “Appellate Authority”
Means the Appellate Authority for Advance Ruling constituted under Section 99.
✅ Meaning in Simple Words
Section 95 simply explains the key terms used in the Advance Ruling provisions.
In practical terms:
👉 An Advance Ruling is a written decision obtained in advance regarding GST treatment of a transaction.
👉 An Applicant is a registered person or a person planning to register under GST.
👉 The ruling is given by a designated Authority constituted under GST law.
📌 Key Features of Section 95
✔ Applies only to Chapter XVII (Advance Ruling provisions)
✔ Defines the scope of advance ruling
✔ Covers both existing and proposed transactions
✔ Restricts eligibility to registered or registrable persons
✔ Clarifies appellate mechanism terminology
📖 Important Observations
1️⃣ Advance Ruling Can Be Sought Before Supply
The definition includes supply “being undertaken or proposed to be undertaken”.
This means:
• A taxpayer may seek clarity before executing a transaction.
• It helps in tax planning and avoiding disputes.
2️⃣ Limited to Specified Questions
The ruling can only be sought on matters specified in Section 97(2), such as:
• Classification
• Applicability of notification
• Time and value of supply
• Input Tax Credit eligibility
• Requirement of registration
• Whether activity amounts to supply
3️⃣ Binding Nature Comes Later (Section 103)
Section 95 defines the term, but binding effect is governed under Section 103.
🎯 Objective of Section 95
The purpose of Section 95 is:
✔ To create a clear legal framework for advance ruling mechanism
✔ To define scope and authority structure
✔ To reduce litigation by providing certainty in taxation
✔ To promote voluntary compliance
⚖️ Judicial Perspective on Advance Ruling
Although Section 95 defines terminology, courts have interpreted advance ruling provisions strictly.
1️⃣ Columbia Sportswear Company v. Director of Income Tax (2012) (SC)
The Supreme Court held that advance ruling provisions must be interpreted strictly as per statute.
👉 Principle: Jurisdiction of authority is limited to statutory framework.
2️⃣ Various High Court Rulings under GST
Courts have held that advance ruling authority cannot travel beyond questions permitted under statute.
👉 Section 95 restricts ruling to defined matters only.
📊 Practical Example
A company plans to supply a new product and is unsure about GST rate.
Before making supply:
➡ It files application for Advance Ruling.
➡ Authority examines matter and gives decision.
This ruling provides clarity and prevents future tax disputes.
❓ Frequently Asked Questions (FAQs) – Section 95 CGST
Q1. What is the purpose of Section 95?
To define key terms relating to advance ruling under GST.
Q2. Who can apply for advance ruling?
Any registered person or person seeking GST registration.
Q3. Can an unregistered person apply?
Only if he is desirous of obtaining registration.
Q4. Does advance ruling apply to past transactions?
No. It applies to transactions being undertaken or proposed to be undertaken.
Q5. Is advance ruling binding on all taxpayers?
No. It is binding only on the applicant and concerned officer.
Q6. Can ruling be sought on any GST issue?
No. Only on specified matters under Section 97(2).
Q7. What authority gives advance ruling?
Authority constituted under Section 96.
Q8. Is there an appeal against advance ruling?
Yes, under Section 100 before Appellate Authority.
Q9. Can advance ruling be rectified?
Yes, under Section 102 for mistake apparent on record.
Q10. Why is Section 95 important?
Because it lays the foundation of the entire Advance Ruling framework under GST.
📝 Conclusion
Section 95 of the CGST Act, 2017 provides the essential definitions governing the Advance Ruling mechanism. It sets the legal groundwork for obtaining tax certainty before or during business transactions.
By clearly defining the scope, applicant eligibility, and authority structure, this section ensures that the Advance Ruling system operates within a well-defined statutory framework, thereby promoting clarity, compliance and reduced litigation under GST law.
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