GST Appeal Not Maintainable Section 98(2) Order 2026 AAAR

What Happened?

The Authority for Advance Rulings (AAR) in Tamil Nadu recently dismissed an appeal filed under Section 100(1) of the CGST Act, 2017, holding that the appeal was not maintainable. The key reason: the original AAR order was issued under Section 98(2), not Section 98(4). This technical distinction means that not all AAR rulings can be appealed before the Appellate Authority for Advance Rulings (AAAR). This ruling, issued in August 2026, is highly relevant for businesses in AY 2025-26 and AY 2026-27 who are seeking clarification on GST matters through the AAR mechanism.

Background & Legal Context

To understand this ruling, you need to know the difference between Section 98(2) and Section 98(4) of the CGST Act, 2017:

• Section 98(2) Order: This is an interim or procedural order issued by the AAR during the course of proceedings. It may relate to procedural matters, extension of time, adjournment requests, or other interlocutory issues. These are not final rulings on the core GST issue.
• Section 98(4) Order: This is the final order issued by the AAR after hearing both parties and deciding the substantive GST question. This is the ruling that answers the taxpayer's advance ruling application on merit.

The CGST Act, 2017 provides under Section 100(1) that an appeal against an order of the AAR passed under Section 98(4) can be filed before the AAAR. Critically, Section 100(1) does not permit appeals against Section 98(2) orders because these are interim or procedural in nature.

In the Tamil Nadu case, the applicant had filed an appeal before the AAAR against a Section 98(2) order. The AAAR took the view that since the original AAR order was issued under Section 98(2)—and not Section 98(4)—the appeal was not maintainable under Section 100(1). The AAAR essentially said: "This is not a final order, so you cannot appeal it here. You must wait for the final order under Section 98(4)."

This interpretation aligns with the statutory language and the purpose of the advance ruling mechanism. The intention is to allow appeals only against final substantive rulings, not against procedural orders or interim directions.

What Does This Mean for You?

For GST Practitioners and Businesses:

• Know the Type of Order You Receive: When the AAR issues an order in response to your advance ruling application, carefully check whether it is under Section 98(2) or Section 98(4). The order document itself should clearly state this. A Section 98(2) order is typically procedural (e.g., "time extended for filing written submissions"), while a Section 98(4) order is final (e.g., "the classification of the goods is HSN code 2710").
• Appeal Rights Are Limited for Section 98(2) Orders: If you receive a Section 98(2) order and disagree with it, you cannot directly appeal before the AAAR. Instead, you must raise your objections when you file your written submissions or appear for the next hearing before the AAR. Your right to appeal arises only after the AAR issues the final Section 98(4) order.
• Time Constraint—Don't Miss the Final Order: Once the AAR issues a Section 98(4) order, you have 30 days (as per Section 100 of CGST Act) to file an appeal before the AAAR. Plan your appeal strategy accordingly. If you wait beyond 30 days, you lose the right to appeal.
• Practical Impact on AY 2025-26 and AY 2026-27: For taxpayers with pending AAR applications for assessment years 2025-26 and 2026-27, this ruling means you must be vigilant about distinguishing interim orders from final orders. An unfavorable procedural order (Section 98(2)) should not discourage you from continuing the AAR process—you still have the chance to present your case fully and appeal the final order if needed.
• Cost and Time Implications: Filing an appeal against a non-maintainable Section 98(2) order wastes time and legal fees. The AAAR will dismiss the appeal in limine, setting your appeal process back. This case serves as a reminder to ensure your appeal is filed against the correct final order.

For Tax Departments and Revenue Authorities: This ruling reinforces the principle that the advance ruling mechanism is designed for final substantive guidance, not for interim procedural disputes. The distinction protects the integrity of the process.

What Should You Do Now?

Action Items for Taxpayers:

• Review Pending AAR Cases: If you have an advance ruling application pending before the AAR, keep track of all orders issued. Maintain a clear record of whether each order is under Section 98(2) or Section 98(4).
• Obtain Clarity from the AAR: If an order is ambiguous about whether it is under Section 98(2) or Section 98(4), write to the AAR seeking clarification. Do not file an appeal blindly.
• Engage a GST Professional: Given the technical nature of the distinction, consult with a GST expert or CA before filing any appeal. A wrongly filed appeal will be dismissed and cannot be refiled easily.
• Plan Your Appeal Timeline: Once you receive a Section 98(4) order, mark your calendar for Day 1 (order date) and Day 30 (last day to file appeal). Do not miss the 30-day window.
• Preserve Evidence of Order Type: Keep certified copies of all AAR orders clearly marking the section under which they are issued. This will be important if the order is later challenged or if disputes arise regarding appeal maintainability.

For Pending Litigations: If you have already filed an appeal against a Section 98(2) order before the AAAR, expect the authority to dismiss it as non-maintainable based on this Tamil Nadu ruling. You may need to file a fresh appeal once the Section 98(4) order is issued.

Key Takeaways

• Section 98(2) Orders Are Interim: Procedural or interim orders issued under Section 98(2) cannot be appealed before the AAAR. Appeals are permitted only against final Section 98(4) orders.
• Section 100(1) Limits Appeal Rights: The CGST Act explicitly restricts appeals under Section 100(1) to Section 98(4) orders only, making a clear legal distinction that courts and authorities strictly follow.
• Tamil Nadu AAAR's Stance: The Tamil Nadu AAAR has taken a strict interpretation, dismissing appeals filed against Section 98(2) orders as non-maintainable, setting a precedent for similar cases.
• 30-Day Appeal Window Critical: For final Section 98(4) orders, the 30-day appeal window is strict. Missing this deadline means losing your right to appeal entirely—no extension is typically available.
• Taxpayers Must Be Vigilant: In AY 2025-26 and AY 2026-27, taxpayers pursuing advance rulings must carefully track order types and file appeals only against final orders, lest their appeals be dismissed as non-maintainable.

Bottom Line: The August 2026 Tamil Nadu AAAR ruling serves as a critical reminder that the advance ruling process has strict procedural requirements. Not every AAR order is appealable. Understanding the distinction between Section 98(2) and Section 98(4) is essential to protecting your appellate rights. If you misidentify the order type, your appeal will be rejected before reaching the merits stage.

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