Service Buyers Cannot Seek GST Advance Ruling on Vendor Tax Rates
A service recipient cannot apply for a GST advance ruling on tax rates unless tax is payable under reverse charge.
- Ruling
- NO.GST-ARA- 45/2017-18/B- 52, Mumbai, dt. 20/6/2018
- Dated
- 20 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
- VNIT asked if security and pure services received were exempt from GST.
- Tax authorities rejected the application without evaluating the GST exemption claim.
- Service buyers cannot request advance rulings unless reverse charge rules apply.
- Only service providers or recipients paying under reverse charge can apply.
In short
Visvesvaraya National Institute of Technology asked the Maharashtra Authority for Advance Ruling under Order GST-ARA- 45/2017-18/B- 52 whether pure services like security and gardening received by it were exempt from GST under Notification No. 12/2017-Central Tax (Rate). The institute wanted to confirm if its suppliers should charge zero tax. The authority refused to answer the tax question, ruling that the application itself was not valid because a buyer cannot ask for a ruling on a seller's tax obligations.
What has changed
How it worked before
Many businesses assumed that any registered organization receiving goods or services could file a GST advance ruling to clarify if their suppliers should charge tax.
What has changed
The authority rejected the application at the start without checking if the services were exempt from GST. It held that a buyer cannot apply for an advance ruling regarding tax on incoming supplies unless the buyer pays tax directly under the reverse charge mechanism. In practice, service buyers cannot use the advance ruling route to decide what GST rate their suppliers should charge.
Who this affects
Businesses and organizations that buy services and want to know whether their vendors should charge GST.
An example
A private college hires an external agency to provide campus security and maintenance. The college believes these pure services are exempt from GST and considers filing a GST advance ruling to confirm. Based on this ruling, the tax office will reject the college's application because the college is only the service recipient. To get an official ruling, the security agency supplying the service must submit the application itself.
What you should do
Ask your service provider to file the GST advance ruling application if official clarity on tax is needed. Remember that an advance ruling only binds the specific business that applied and its tax officer. Do not alter how you pay GST to vendors based on another entity's ruling.
If you do nothing
If you file an advance ruling application as a service buyer without being subject to reverse charge, tax officers will reject it on procedural grounds. You will lose the application fee and the time spent preparing the filing. Furthermore, refusing to pay GST to suppliers based on your own interpretation can lead to vendor disputes and interest penalties.
The terms explained
- advance ruling
- An official decision by tax authorities that clarifies how GST rules apply to a specific business transaction before it takes place.
- reverse charge mechanism
- A GST rule where the buyer of goods or services pays the tax directly to the government instead of paying it to the supplier.
- pure services
- Services provided without any supply of goods or raw materials, such as security guarding, consulting, or basic cleaning.
The ruling in detail
Authority for Advance Ruling
VISVESVARAYA NATIONAL INSTITUTE OF TECHNOLOGY, NAGPUR
NO.GST-ARA- 45/2017-18/B- 52, Mumbai, dt. 20/6/2018 · Maharashtra
Questions before the authority
- Whether Rate of Tax on Pure services (excluding works contract service or other composite supplies involving supply of any goods) received by VISVESVARAYA NATIONAL INSTITUTE OF TECHNOLOGY Nagpur from Service Providers is NIL as per Entry No 3 of Notification No. 12/2017- Central Tax (Rate) dated 28th June, 2017 ?
Facts
The applicant, Visvesvaraya National Institute of Technology (VNIT), Nagpur, is an autonomous institute of national importance created under an Act of Parliament. It receives various pure services including security, manpower, gardening, and hygiene maintenance from third-party service providers. The applicant sought an advance ruling to confirm whether pure services received by it qualify for NIL tax rate under Entry No. 3 of Notification No. 12/2017-Central Tax (Rate).
Ruling
The Authority for Advance Ruling rejected the application at the preliminary stage without examining the merits of the exemption. It held that an advance ruling application filed by a **service recipient** is not maintainable unless the liability to pay tax rests on the recipient under the **reverse charge mechanism**.
Reasoning
The authority observed that the applicant is a recipient of services and not a supplier of services. The pure services received by the applicant are not covered under the reverse charge mechanism, meaning the statutory tax liability rests on the service providers. Because the applicant is neither the supplier nor a recipient liable under reverse charge, it is not an eligible applicant to seek an advance ruling on the taxability or exemption of inward supplies. Consequently, the application was rejected under the proviso to section 98(2) of the CGST Act, 2017.
Provisions relied on
- Section 95 of the CGST Act, 2017
- Section 98(2) of the CGST Act, 2017
- Entry No 3 of Notification No. 12/2017-Central Tax (Rate) dated 28th June, 2017
For the practitioner
This ruling reinforces that a **service recipient** cannot file an advance ruling application regarding the rate or exemption of tax on its inward supplies unless the tax is payable under **reverse charge**. Tax practitioners must ensure that applications are filed by the actual service provider or a recipient subject to RCM to avoid threshold rejection on maintainability.
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/mah_aar_45_2017-18_b-52_20.06.2018_vnitn.pdf
Legibility of the scan, as read: high.
Prepared 19-10-2026.
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