GST Authority Cannot Explain Foreign Trade Policy or Detailed Tax Procedures
The Madhya Pradesh AAR rejected a request to explain Foreign Trade Policy rules and detailed operational procedures under GST.
- Ruling
- Order No. 06/2018 dated 19.07.2018
- Dated
- 19 Jul 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
- A company asked for step-by-step procedures under a GST export notification.
- It also asked how Foreign Trade Policy rules apply to local purchases.
- The tax authority rejected the application at the initial admission stage.
- GST authorities cannot decide on non-GST laws like Foreign Trade Policy.
- The authority only answers specific GST questions, not procedural instructions.
In short
Spentex Industries Ltd., a yarn manufacturer holding an Advance Authorisation from the Directorate General of Foreign Trade (DGFT), approached the Madhya Pradesh Authority for Advance Ruling (AAR). The company wanted step-by-step procedures for buying goods from local suppliers under Notification No. 48/2017-Central Tax. It also asked how the Foreign Trade Policy 2015-2020 applies to buying goods under Advance Authorisation. The company was seeking operational instructions rather than asking whether GST applied.
What has changed
How it worked before
Businesses often assumed they could approach the GST Advance Ruling authority to get step-by-step operational manuals or to resolve doubts involving connected trade laws like the Foreign Trade Policy.
What has changed
The authority rejected the application under Order 06/2018 dated 19.07.2018 without answering the questions. It ruled that Section 97(2) of the CGST Act gives it power to answer specific tax questions, not to write procedural manuals or interpret non-GST laws. In practice, businesses cannot use advance rulings to get standard operating procedures or guidance on foreign trade policies.
Who this affects
Businesses buying goods from local suppliers under Advance Authorisation schemes or those seeking step-by-step instructions under GST notifications.
An example
A manufacturer holds an Advance Authorisation to get duty-free inputs. They want to buy raw materials locally under deemed export benefits under Notification No. 48/2017-Central Tax. Instead of asking if the tax benefit applies, they ask the GST ruling authority to lay down the entire step-by-step filing process. Based on this ruling, the authority will reject the application because laying down operational steps is beyond its statutory powers.
What you should do
Consult a tax professional or official departmental circulars for procedural guidance instead of filing an advance ruling application. Remember that an advance ruling binds only the business that asked and its own tax officer, and does not automatically become general law.
If you do nothing
If you apply for an advance ruling expecting operational instructions or non-GST legal advice, your application will be rejected at the start. This wastes your time and application fees. You must rely on official GST circulars and tax advisors for procedural help.
The terms explained
- Advance Ruling
- An official decision given by tax authorities to a business about specific tax questions before taking up a transaction.
- Advance Authorisation
- A government scheme under the Foreign Trade Policy that allows duty-free import or local purchase of raw materials used for making exported goods.
- Domestic Tariff Area
- The regular commercial area inside India that is outside special economic zones and subject to standard customs and tax duties.
- Deemed Export
- Supplies of goods within India that do not physically leave the country but qualify for export tax benefits under specific rules.
The ruling in detail
Authority for Advance Ruling
Spentex Industries Ltd.
Order No. 06/2018 dated 19.07.2018 · Madhya Pradesh
Questions before the authority
- Please specify the complete procedure for S.No.1 & Explanation 1 of the Notification 48/2017-Central Tax dtd.18.10.2017 for supplies by DTA to Advance Authorisation Holder?
- Please specify the applicability of Foreign Trade Policy 2015-2020 Mid Term Review and specify procedure for procuring goods from DTA against Advance Authorisation?
Facts
The applicant is engaged in the manufacture of textile yarn and holds an Advance Authorisation issued by the DGFT. They sought rulings regarding the complete procedure for deemed export supplies from Domestic Tariff Area (DTA) to Advance Authorisation holders under Notification No. 48/2017-Central Tax. They also sought clarification on procedural mechanisms and the applicability of the Foreign Trade Policy 2015-2020 Mid Term Review.
Ruling
The Authority **rejected the application at the admission stage** under Section 98(2) of the CGST/MPGST Act 2017. It held that procedural queries and interpretations of the Foreign Trade Policy fall **outside the permissible scope** under Section 97(2).
Reasoning
The Authority examined the questions against the finite list of permissible matters under Section 97(2) of the CGST Act, 2017. For the first question, the applicant did not dispute the applicability of Notification No. 48/2017-Central Tax under Section 97(2)(b), but merely sought a clarification on procedure, which the Authority is neither mandated nor obliged to lay down. For the second question, seeking rulings on the applicability or procedures of the Foreign Trade Policy lies entirely beyond the GST statutory framework. Therefore, the application was held not worthy of admission under Section 98(2).
Provisions relied on
- Section 97(2) of the CGST Act, 2017
- Section 97(2)(b) of the CGST Act, 2017
- Section 98(2) of the CGST Act, 2017
- Notification No. 48/2017-Central Tax dated 18.10.2017
For the practitioner
This order establishes that the AAR **will not issue procedural directives** where the notification itself is unchallenged. Additionally, questions regarding non-GST statutes such as the **Foreign Trade Policy are strictly outside AAR jurisdiction** under Section 97(2).
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/final_order_spentex_industries_ltd.pdf
Legibility of the scan, as read: high.
Prepared 20-10-2026.
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