Buyers Cannot Seek GST Advance Ruling on Tax Charged by Suppliers
The Uttar Pradesh AAR ruled that buyers cannot seek a GST advance ruling regarding the tax rate or HSN code charged on purchases.
- Ruling
- Order No. 12 dated 15.06.2018
- Dated
- 15 Jun 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
- Ramway Foods asked for the correct HSN classification for packing bags bought from suppliers.
- The tax authority rejected the advance ruling application without deciding the tax rate.
- Buyers cannot use GST advance rulings for goods or services they purchase from others.
- Advance rulings are only available to sellers regarding their own outward supplies.
In short
M/S Ramway Foods Ltd. manufactures exempt items like wheat flour, maida, and suji, and buys packing bags from suppliers who charge 18% GST under HSN classification 39232990. Because its final products are exempt from GST, the company cannot claim input tax credit on the GST paid for these bags. The company filed application UP_AAR_12 with the Uttar Pradesh Authority for Advance Ruling to ask if the bags should instead be classified under HSN 63053300 at a lower tax rate.
What has changed
How it worked before
Many businesses assumed that any GST-registered taxpayer could file an advance ruling application to clarify the correct tax rate or HSN classification on goods they buy, especially when unable to claim input tax credit.
What has changed
The Uttar Pradesh Authority for Advance Ruling rejected the application as not maintainable under Section 95(a) of the CGST Act. The authority decided that advance rulings are strictly restricted to sellers asking about their own sales, not buyers asking about their purchases. In practice, a purchasing business cannot use the advance ruling system to lower or challenge the GST rate charged by its vendors.
Who this affects
Businesses that buy goods or services and want to challenge or clarify the HSN classification or GST rate charged on invoices by their suppliers.
An example
XYZ Traders manufactures unbranded grain products that are exempt from GST. XYZ buys woven plastic sacks from a manufacturer who charges 18% GST. Because XYZ sells exempt food, it cannot claim input tax credit on the tax paid for the sacks. XYZ wants to ask the GST authority if the seller should charge a lower tax rate under a different HSN code. Under this ruling, XYZ cannot file an advance ruling application because XYZ is the buyer, not the supplier of the sacks.
What you should do
If you suspect a supplier is using the wrong GST rate or HSN classification, discuss the issue directly with the supplier or request that they seek a ruling. Remember that an advance ruling legally binds only the business that applied for it, but tax officers across India enforce the rule that buyers cannot apply for rulings on their purchases.
If you do nothing
If you file an advance ruling application to question the GST rate on goods you purchase, the tax authority will reject your application upfront. You will lose the application fee and time spent preparing the case. Tax officers will not issue a ruling on a vendor's tax rate at the request of a buyer.
The terms explained
- Input Tax Credit
- A feature under GST that allows a business to reduce the tax it owes on sales by the amount of tax it already paid on purchases.
- HSN Classification
- An international standardized code system used under GST to categorize products and determine their correct tax rate.
- Advance Ruling
- An official written decision given by tax authorities to a specific taxpayer explaining how GST laws apply to their business activities.
- Inward Supply
- Goods or services that a business buys or receives from suppliers.
The ruling in detail
Authority for Advance Ruling
M/s. Ramway Foods Ltd.
Order No. 12 dated 15.06.2018 · Uttar Pradesh
Questions before the authority
- Whether the classification of Sacks & bags of a kind used for the packing of goods of manmade textiles materials will appropriately classifiable falling under HSN 63053300 or under 39232990 of GST Tariff
Facts
The applicant is engaged in manufacturing Wheat Flour, Maida, and Suji, which are exempted goods supplied without payment of GST. To pack these final products, the applicant purchases woven fabric sacks/bags from suppliers who classify them under HSN 39232990 and charge GST at 18%. Since the applicant cannot claim input tax credit due to its final goods being exempt, it filed an application to determine the correct HSN classification and applicable GST rate for the bags it purchases.
Ruling
The Authority held that the application for **advance ruling is not maintainable** because the applicant is a **recipient of goods** rather than the supplier or manufacturer. Consequently, no ruling was pronounced on the classification or tax rate of the packing bags.
Reasoning
Under Section 95(a) of the CGST/SGST Act, 2017, an advance ruling is defined as a decision provided on questions specified under Section 97(2) or 100 in relation to the **supply of goods or services undertaken or proposed to be undertaken by the applicant**. Because the applicant is a recipient of the sacks/bags and not the supplier or manufacturer of those goods, the question asked does not directly relate to an outward supply made by the applicant. Therefore, the advance ruling mechanism cannot be invoked by a recipient regarding inward supplies.
Provisions relied on
- Section 95(a) of the CGST Act, 2017
- Section 95(a) of the UPGST Act, 2017
- Section 97(2) of the CGST Act, 2017
- Section 100 of the CGST Act, 2017
- Notification No. 27/2017-Central Tax (Rate) dated 22.09.2017
For the practitioner
This order highlights that **recipients cannot file an advance ruling application** to challenge or clarify the HSN classification or tax rate charged on their inward supplies. Practitioners must ensure that any advance ruling question directly pertains to outward supplies undertaken or proposed to be undertaken by the applicant.
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_12_15.06.2018_rfl.pdf
Legibility of the scan, as read: high.
Prepared 19-10-2026.
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