What is Authority of Advance Ruling (AAR) under Karnataka GST?
The Authority of Advance Ruling under Karnataka GST is a quasi-judicial body that helps taxpayers get clarity on GST applicability before they make a transaction. It plays a vital role in avoiding future disputes and ensuring tax compliance.
This blog explains how the Karnataka AAR is constituted, its powers, procedures, and recent case highlights—simplified for taxpayers, CAs, and consultants.
Why is AAR Important for GST Clarity?
Here’s how AAR helps:
- Clarifies tax liability in advance
- Prevents litigation and disputes
- Offers legal certainty to businesses
- Saves time and cost for both taxpayer and department
Under the Karnataka Goods and Services Tax Act, 2017, the AAR provides binding rulings on issues raised by the applicant regarding supply of goods or services in the state.
Legal Provision: Sections & Rules Involved
| Provision | Description |
|---|---|
| Section 96 of KGST Act | Empowers State Government to constitute AAR |
| Section 97 | Lists the questions eligible for advance ruling |
| Section 98 | Details the procedure to be followed by AAR |
| Rule 103 of KGST Rules | Relates to the qualifications and appointment of AAR members |
🔗 Source: Karnataka Commercial Taxes Dept
Constitution of Karnataka AAR
- Chairperson: Joint Commissioner of Central Tax
- Member: Joint Commissioner of State Tax
- Appointed by: Government of Karnataka in consultation with the GST Council
- Jurisdiction: Only for GST matters concerning supplies within Karnataka
📌 Note: If members differ in opinion, no ruling is issued, and the matter escalates to the Appellate Authority of Advance Ruling (AAAR).
Topics Eligible for Advance Ruling
Taxpayers can seek advance ruling on:
- GST liability of a supply
- Classification of goods/services
- Applicability of a notification
- Input tax credit eligibility
- Time and value of supply
- Registration requirements
⚠️ Matters involving determination of place of supply or those already pending before appellate forums are not eligible.
How to Apply for AAR in Karnataka
Step-by-Step Process:
- File Form GST ARA-01 with ₹5,000 fee
- Submit supporting documents related to the query
- Attend hearing (if called) for clarifications
- Receive ruling within 90 days from date of application
✅ AAR ruling is binding on the applicant and concerned officer only.
Expert Tip: When AAR Works Best
“AAR is most useful when launching a new business line or entering inter-state transactions. Getting a ruling prevents future tax disputes and helps in structured pricing.”
— Rajesh Hegde, Indirect Tax Consultant, Bengaluru
Landmark Karnataka AAR Ruling Example
Case: M/s Columbia Asia Hospitals
Issue: Applicability of GST on employee meals supplied by hospital
Ruling: AAR held that GST is applicable as it’s not part of healthcare exemption
Legal Reference: AAR No. KAR ADRG 15/2018
This case illustrates how even internal operational supplies can attract GST.
FAQs on Karnataka AAR
Q1. Is AAR binding across India?
No. Rulings are binding only on the applicant and jurisdictional officer in Karnataka.
Q2. Can I appeal an AAR decision?
Yes, you can file an appeal before AAAR within 30 days.
Q3. Is AAR applicable to both individuals and companies?
Yes. Any registered or unregistered person can apply for an advance ruling.
Final Thoughts
The Authority of Advance Ruling under Karnataka GST is a powerful tool for businesses to ensure tax certainty and avoid disputes. But use it wisely—choose well-defined queries and ensure your documentation is solid.
Need help filing for AAR or dealing with GST notices?
📞 Connect with our experts at Efiletax.in – your trusted partner in GST compliance, from registration to litigation support.
Summary
The Authority of Advance Ruling under Karnataka GST offers clarity on tax matters like GST liability and ITC eligibility. Learn about its powers, structure, and how to apply via Form ARA-01 to avoid future disputes. Ideal for small businesses and consultants seeking GST certainty.