GST Advance Ruling Limits on Export Status and Refund Eligibility
The Appellate Authority for Advance Ruling confirmed that tax authorities can refuse to answer questions about export status and refund eligibility.
- Ruling
- HAR/HAAAR/2018-19/02 dated 22.11.2018
- Authority
- Appellate Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- Esprit India asked if their services to a foreign associate qualify as exports.
- They also asked if they were eligible for GST refunds on inputs.
- The Authority ruled these questions fall outside the scope of advance rulings.
- The ruling confirms that AARs only address specific matters like service classification.
In short
Esprit India Private Limited asked the Appellate Authority for Advance Ruling (AAAR) in Haryana to decide if their sourcing services for a Hong Kong company counted as exports and if they could claim GST refunds. The authority refused to answer these specific questions, stating they were not allowed to rule on export status or refund eligibility under the current law.
What has changed
How it worked before
Businesses often assumed that an advance ruling application could cover any tax-related uncertainty, including whether a service qualifies as an export or if a refund is due.
What has changed
The authority clarified that under Section 97(2) of the CGST Act, they only have the power to rule on specific issues like service classification and tax rates. They cannot provide rulings on whether a transaction is an export or if a business is entitled to a refund, meaning these issues must be settled through regular assessment processes.
Who this affects
Businesses providing services to foreign parent companies or associates who are unsure about their export status or refund rights.
An example
Imagine a software firm in Bangalore provides coding services to a client in the UK. They want to know if this qualifies as an export of services to avoid paying GST. Based on this ruling, if they apply for an advance ruling on the 'export status' of their work, the authority will likely reject that specific question and only confirm the classification of their software services.
What you should do
If you have similar questions, do not expect an advance ruling to provide a definitive answer on export status or refunds. This ruling only binds Esprit India and their specific tax office; it is not a general law that applies to your business. Consult with a tax professional to determine your status through standard filing and assessment procedures.
If you do nothing
If you assume this ruling guarantees your services are exports, you risk underpaying GST and facing penalties during an audit. A tax officer is not bound by your interpretation of another company's ruling. If your classification is later found to be incorrect, you will owe the unpaid tax plus interest and potential fines.
The terms explained
- Advance Ruling
- A formal decision provided by tax authorities to a business regarding the tax treatment of a specific transaction.
- Export of Services
- Services provided from India to a recipient located outside India, which may be taxed at a zero rate under specific conditions.
- SAC
- Services Accounting Code, a system used to classify different types of services for GST purposes.
The ruling in detail
Appellate Authority for Advance Ruling
M/s Esprit India Private Limited
HAR/HAAAR/2018-19/02 dated 22.11.2018 · Haryana
Questions before the authority
- Taxability of above stated services provided by Esprit India to its associate concern in Hong Kong EDCFE under GST regime.
- Whether the above stated services provided by Esprit India are covered under Export of Services having Zero rated taxability.
- Whether Esprit India is eligible for seeking refund of GST for the taxes paid on input services or goods or both.
Facts
The appellant is a subsidiary of Esprit De Corp (Far East) Limited, Hong Kong (EDCFE), which acts as a sourcing service provider for Esprit Germany. The appellant acts as a sub-contractor for EDCFE, providing various sourcing support services in India, such as market research, vendor evaluation, and quality control. The appellant receives a lump sum consideration from EDCFE for these services.
Ruling
| Question | What the authority ruled |
|---|---|
| Taxability of services | The AAR correctly identified the SAC description and rate of tax. The Appellate Authority upheld the AAR's findings on this point. |
| Export of services/Zero rating | Declined to answer. Held to be outside the scope of Section 97(2) of the CGST/HGST Act. |
| Eligibility for refund | Declined to answer. Held to be outside the scope of Section 97(2) of the CGST/HGST Act. |
The Appellate Authority upheld the original Advance Ruling, dismissing the appeal. It confirmed that the AAR correctly identified the SAC description and tax rate for the services provided. It further held that the AAR correctly declined to answer questions 2 and 3 as they fell outside the scope of Section 97(2) of the CGST/HGST Act.
Reasoning
The Appellate Authority observed that the appellant is providing specific services including market research, trademark protection assistance, and quality control. It concluded that the AAR had correctly identified the relevant SAC and tax rate for these services. Regarding the other questions, the Authority relied on Section 97(2) of the CGST/HGST Act, which limits the scope of advance rulings to specific matters like classification, time/value of supply, and tax liability. It determined that questions regarding export status and refund eligibility did not fall within these statutory parameters.
Provisions relied on
- Section 97(2) of the CGST Act/HGST Act
- Section 100(1) of the CGST Act/HGST Act
- Section 101 of the CGST Act/HGST Act
- Section 103 of the CGST Act/HGST Act
For the practitioner
This ruling reinforces the **limited jurisdiction** of the Authority for Advance Ruling under Section 97(2). It confirms that AARs may decline to answer questions regarding the **export status** or **refund eligibility** of services if they do not strictly fall within the enumerated categories of the Act. Practitioners should note that the appellate authority will uphold an AAR's refusal to address such procedural or eligibility-based questions.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/2024-02/esprit-india-private-limited-22-11-2018.pdf
Legibility of the scan, as read: high.
Prepared 13-10-2026.
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