GST Advance Ruling: Why You Cannot Use It for Transitional Issues
The Authority for Advance Ruling in Karnataka clarified that it cannot decide on tax issues related to the transition from pre-GST laws.
- Ruling
- KAR ADRG 09 / 2019 dated 15-05-2019
- 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
- Urbanac Projects asked how to adjust service tax paid on pre-GST advances.
- The applicant withdrew the request after realizing the forum was inappropriate.
- Advance rulings are not meant for resolving transitional tax matters.
In short
The company asked the Authority for Advance Ruling (AAR) how to handle service tax paid on advances received before the Goods and Services Tax (GST) regime began. The authority did not answer the question because the company withdrew its application, acknowledging that the AAR is not the right place to settle these specific transition-related disputes.
What has changed
How it worked before
Businesses often hoped the AAR could provide clarity on how to carry forward or adjust tax credits and payments from the old service tax system into the new GST framework.
What has changed
The authority confirmed that transitional issues fall outside the scope of the advance ruling process. This means you cannot use this legal route to get a binding answer on how to manage old tax payments or credits under the new GST rules.
Who this affects
Businesses that have pending tax questions or credit adjustments stemming from the old service tax or VAT regimes.
An example
Imagine a construction firm that paid service tax on an advance in 2016 but only completed the work in 2018. They might want to ask the AAR if they can claim a refund or credit for that old tax. Based on this order, the AAR would not answer that question, and the firm would need to seek guidance through regular assessment channels instead.
What you should do
If you have a dispute regarding pre-GST tax adjustments, do not file for an advance ruling as it will not be accepted. This order is not a law that applies to your business; it is a procedural reminder that the AAR will reject applications concerning transitional matters.
If you do nothing
If you file an application for a transitional issue, the authority will likely reject it or ask you to withdraw it, wasting your time and legal fees. Relying on an incorrect assumption about what the AAR can decide may leave your tax position uncertain and vulnerable during a future audit.
The terms explained
- Advance Ruling
- A formal decision provided by tax authorities to a business to clarify how GST laws apply to their specific transactions.
- Transitional matters
- Issues or tax credits that arise specifically because a business moved from the old tax system, like service tax, to the current GST system.
- Works contract
- A service that involves both the supply of goods and labor, commonly seen in construction and infrastructure projects.
The ruling in detail
Authority for Advance Ruling
M/s Urbanac Projects Private Limited
KAR ADRG 09 / 2019 dated 15-05-2019 · Karnataka
Questions before the authority
- How to adjust the Service Tax which has been paid on mobilization advances in Pre-GST regime?
Facts
The applicant is engaged in the business of executing works contract services for residential complexes, commercial properties, and special economic zones. They received mobilization advances in the pre-GST regime and paid service tax on these amounts. The applicant sought an advance ruling on how to adjust this pre-GST service tax payment.
Ruling
The authority did not provide a substantive ruling on the tax question. Instead, the application was disposed of as withdrawn at the request of the applicant. The applicant requested the withdrawal on the grounds that an advance ruling cannot be sought in respect of transitional matters.
Reasoning
The applicant appeared for a hearing and was initially directed to revise their application by reframing the questions. Subsequently, the applicant chose not to file a revised application and instead requested to withdraw the matter. The authority accepted this request, noting the applicant's admission that advance rulings are not maintainable for transitional issues. Consequently, the authority disposed of the application as withdrawn without addressing the merits of the tax question.
Provisions relied on
- Section 97 of CGST Act, 2017
- Section 97 of KGST Act, 2017
- Rule 104 of CGST Rules, 2017
- Rule 104 of KGST Rules, 2017
- Section 98(4) of CGST Act, 2017
- Section 98(4) of KGST Act, 2017
For the practitioner
This order serves as a procedural reminder that the **Advance Ruling mechanism is not the appropriate forum** for resolving disputes or seeking guidance on **transitional matters** arising from the shift from pre-GST regimes. Practitioners should note that the authority will permit the withdrawal of an application if it is acknowledged that the subject matter falls outside the scope of Section 97. This ruling does not provide any guidance on the actual adjustment of pre-GST service tax.
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/krntk_09-2019_urbanac_projects_pl.pdf
Legibility of the scan, as read: high.
Prepared 20-10-2026.
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