In the wake of contradictory orders passed by Authority for Advance Rulings (AARs) in different states, the government is planning to revamp the advance ruling mechanism under the Goods and Services Tax (GST) by setting up either a centralised authority or 4 regional authorities. As per the GST law, all states are required to set up at least one AAR comprising one member from the central tax department, and the other from the respective state.
In view of the confusion being created by contradictory rulings given by different authorities on the same or similar issues, the Finance Ministry is weighing the option of setting up either a centralised AAR or regional AARs. As tax officers are members of the authorities, there can be a conflict of interest as they often try to protect the interest of revenue while giving their rulings. The AARs in different states have so far passed about 60 orders under the new tax regime, while most states are yet to set up the GST appellate authority to entertain appeal against AAR verdict.
Recently, the New Delhi bench of the AAR had held that international passengers purchasing goods at airport 'Duty-Free' shops are liable to deduct GST from passengers. However, these shops were exempt from service tax, and Central Sales Tax in the earlier regime. The revenue department is planning to come up with a clarification exempting 'duty-free' shops from GST.