UP AAR Rejects GST Advance Ruling Request for Out-of-State Invoicing
The UP AAR rejected a company's request regarding tax invoices from its out-of-state mines because it cannot rule on suppliers outside Uttar Pradesh.
- Ruling
- Order No. 03 dated 04.05.2018
- Dated
- 04 May 2018
- Authority
- 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
- Company asked if daily tax invoices were required for mine transfers.
- Tax authority rejected the application without answering the main question.
- Only the tax authority in the supplier's state can decide invoicing rules.
- Generating thousands of invoices was causing ERP and GSTR mismatch issues.
In short
Hindalco Industries Ltd operates a plant in Uttar Pradesh and receives bauxite daily from its captive mines in Jharkhand and Chhattisgarh. The company generated around 15,000 tax invoices a month, causing severe processing delays in its system and mismatches in GST returns like GSTR-1. To fix this, the company approached the Uttar Pradesh Authority for Advance Ruling (UP AAR) under order UP_AAR_03 dated 04.05.2018 to ask if a tax invoice was mandatory for every continuous supply.
What has changed
How it worked before
Businesses often assumed that a buyer could ask their local GST authority for an advance ruling on incoming supplies, even if the supplier was registered in another state.
What has changed
The Uttar Pradesh Authority for Advance Ruling decided that the legal obligation to issue a tax invoice rests entirely with the supplier. Because the supplying mines were registered in Jharkhand and Chhattisgarh, the UP authority had no legal jurisdiction over them. In practice, buyers cannot file an advance ruling in their own state to change or clarify invoicing rules for out-of-state suppliers.
Who this affects
Businesses receiving large volumes of stock or raw materials from their own branches, mines, or suppliers registered in different states.
An example
A manufacturing unit in Maharashtra buys raw steel daily from its sister plant in Gujarat and struggles to handle thousands of monthly GST tax invoices. The Maharashtra unit files an advance ruling request with the Maharashtra tax authority to simplify the invoicing process for these transfers. Based on this ruling, the Maharashtra authority would reject the request because the supplier issuing the invoices is registered in Gujarat. To get a valid decision, the company must apply to the advance ruling authority in Gujarat instead.
What you should do
If your business has questions about GST tax invoices issued by out-of-state suppliers, file the advance ruling application in the state where the supplier is registered. Remember that an advance ruling only binds the specific business that applied and its local tax authority, so you cannot automatically apply another company's ruling to your business.
If you do nothing
If you assume your local tax office can approve invoicing changes for out-of-state supplies, your application will be rejected for lack of jurisdiction. If you alter how you issue or receive tax invoices without valid legal approval, tax officers may treat the shipments as un-invoiced sales. This can lead to heavy penalties, seizure of goods, and loss of input tax credit for the buyer.
The terms explained
- tax invoice
- A formal legal document issued by a supplier listing the details, value, and tax amount of goods or services provided.
- advance ruling
- A written decision issued by tax authorities to a specific business clarifying how GST laws apply to its proposed or ongoing transactions.
- distinct persons
- Separate legal units or branches of the same company that are registered under GST in different states.
- input tax credit
- The GST paid on business purchases that can be used to reduce the tax owed on sales.
The ruling in detail
Authority for Advance Ruling
M/s Hindalco Industries Ltd.
Order No. 03 dated 04.05.2018 · Uttar Pradesh
Questions before the authority
- Whether an advance ruling can be issued regarding the requirement of generating tax invoices for continuous inward supplies of bauxite originating from the applicant's captive mines located outside Uttar Pradesh.
Facts
The applicant, located at Renukoot, Uttar Pradesh, receives continuous supplies of bauxite from its captive mines situated in Lohardaga (Jharkhand) and Samari (Chhattisgarh). Transportation occurs daily via road and rail-cum-road using around 400 trucks per day, resulting in approximately 15,000 tax invoices per month. The high volume of invoices caused severe processing delays in the applicant's ERP system and GSTR-1/GSTR-2 mismatches, prompting the applicant to seek clarification on invoicing requirements.
Ruling
The Authority held that the legal liability to issue a tax invoice under Section 31(1) lies with the supplier making the outward supply. Since the supplying captive mines are registered in Jharkhand and Chhattisgarh, the UP AAR **lacks territorial jurisdiction** over them. Accordingly, the application was **disposed of as non-maintainable** without deciding on the procedural merits.
Reasoning
The Authority analyzed Section 31(1) alongside definitions under Section 2(63), 2(83), 2(93), and 2(105) of the UPGST/CGST Act, 2017. It observed that the statutory responsibility to issue a tax invoice rests strictly on the supplier executing the outward supply. Because the supplying units are distinct persons registered outside Uttar Pradesh, the Uttar Pradesh Authority for Advance Ruling has no legal jurisdiction to pass an order binding on entities registered in other states.
Provisions relied on
- Section 2(63) of the CGST/UPGST Act, 2017
- Section 2(83) of the CGST/UPGST Act, 2017
- Section 2(93) of the CGST/UPGST Act, 2017
- Section 2(105) of the CGST/UPGST Act, 2017
- Section 31(1) of the CGST/UPGST Act, 2017
- Section 98 of the CGST/UPGST Act, 2017
For the practitioner
This ruling settles that a recipient cannot seek an advance ruling on invoicing procedures or compliance issues that fall under the statutory obligations of a supplier registered in a different state. Applications regarding outward supply invoicing must be filed before the AAR of the state where the **supplier is registered**, upholding the strict **territorial jurisdiction** of State AARs.
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/AAR/up_aar_03_04.05.2018_hil.pdf
Legibility of the scan, as read: high.
Prepared 17-10-2026.
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