EaseValueWhat Happened?
The West Bengal Authority for Advance Ruling (AAR) recently rejected an advance ruling application filed by IIEST (Indian Institute of Engineering Science and Technology) Shibpur. The key reason: the questions raised in the application were not about IIEST Shibpur's own GST obligations, but rather about faculty services and their GST treatment. This rejection highlights a critical procedural rule that many educational institutions miss when filing advance ruling applications under the GST law.
Background & Legal Context
What is an Advance Ruling?
Under the Goods and Services Tax (GST) law, an advance ruling is a binding determination issued by the Authority for Advance Ruling (AAR) on questions of GST applicability. It provides certainty to businesses before they undertake transactions. This mechanism exists under Section 97 of the CGST Act, 2017 (which continues under GST law in 2025-26).
Who Can Apply for Advance Ruling?
Only the following persons can apply for advance ruling:
- A registered taxable person — about their own supplies or inputs
- A person required to register — about transactions they will undertake
- An applicant person — about supplies they have made or will make
- An applicant person — about eligibility to be registered as a casual taxable person or non-resident taxable person
The Critical Rule: The Question Must Concern the Applicant's Own Tax Position
This is where IIEST Shibpur failed. The advance ruling applicant must be seeking a ruling on their own GST obligations. If the question concerns someone else's tax position (in this case, faculty members' services), the AAR will not admit the application because it lacks "nexus to the applicant."
Section 97 of the CGST Act, 2017 specifically requires that the question must be about the GST treatment relevant to the applicant's own business operations. The AAR cannot issue rulings on general questions of law or on the tax position of third parties.
Why Did the West Bengal AAR Reject This?
IIEST Shibpur likely asked: "Are faculty services subject to GST? What is the tax rate?" While these are legitimate GST questions, they concern faculty members' tax obligations—not IIEST Shibpur's own GST liability. If IIEST wanted an advance ruling, it should have framed the question as: "When IIEST pays faculty members for teaching services, what is my input tax credit eligibility?" or "What is my GST liability when I charge fees to students?"
The AAR correctly held that IIEST Shibpur, as an applicant, must show how the answer affects its own GST position. Merely seeking guidance on whether faculty services are taxable does not establish this nexus.
What Does This Mean for You?
For Educational Institutions (AY 2025-26 & 2026-27):
If your institution—whether a school, college, or university—wants to file an advance ruling on GST, ensure your questions focus on your own tax obligations, not those of teachers, contractors, or other third parties. For example:
- ✓ CORRECT: "As a registered educational institution, when I provide online courses to students outside my state, am I liable to collect IGST?"
- ✗ INCORRECT: "Are fees paid to visiting faculty subject to GST?" (This is about faculty's position, not the institution's)
For Other Businesses:
This ruling reinforces that advance ruling applications must have direct nexus to your business operations. Generic legal questions or questions about your suppliers' or customers' tax positions will be rejected at the admission stage itself.
Practical Impact:
Rejected advance ruling applications waste time and money. More importantly, if you proceed with your planned transactions without clarity, you remain exposed to GST assessments. The West Bengal AAR's decision is a reminder to craft your advance ruling questions carefully with professional help before filing.
What Should You Do Now?
Step 1: Review Your Advance Ruling Application (If You Have One Pending)
If you have filed or are planning to file an advance ruling application:
- Ensure every question directly concerns your own GST liability, input tax credit eligibility, or registration status
- Avoid framing questions about third parties' tax positions (employees, contractors, vendors, customers)
- Connect each question explicitly to a transaction or supply you will undertake
Step 2: Restructure Questions with Proper Nexus
If your advance ruling application mirrors IIEST Shibpur's mistake, amend it before the AAR issues a formal rejection order. Frame questions as:
- "When I (the applicant) supply [service/goods], am I liable to GST?"
- "Am I entitled to input tax credit on these supplies made to me?"
- "What is my registration requirement for the following transactions?"
Step 3: Seek Professional Help Before Filing
Advance ruling applications require precision. Draft the questions with a CA or GST consultant who understands the admissibility requirements. The cost of professional help is minimal compared to rejection and subsequent litigation.
Step 4: Document Your Business Reason
Always include in your application a clear statement of why you need the ruling. Show that the question directly impacts your business decisions in the upcoming financial year (AY 2025-26, AY 2026-27, etc.).
Key Takeaways
- Advance Ruling Requires Nexus: The question must concern the applicant's own GST liability, not any third party's tax position. IIEST Shibpur's rejection in September 2026 reinforces this strict rule.
- Educational Institutions Must Reframe Questions: Instead of asking whether faculty services are taxable, ask how your institution's GST liability is affected when paying faculty or charging students fees.
- Section 97 CGST Act is Strict on Admissibility: The AAR will reject applications at the admission stage itself if questions lack nexus. You do not proceed to substantive arguments.
- Generic Legal Questions Won't Be Admitted: Seeking advance ruling on general GST law principles (e.g., "Is service X taxable?") without showing your own tax exposure will fail.
- Professional Drafting is Essential: Before filing any advance ruling application for AY 2025-26 or 2026-27, ensure a qualified GST advisor reviews your questions for proper nexus and compliance with Section 97 requirements.
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