revenue by SabeerAli1


									Authority for Advance Rulings for Customs, Central Excise and Service Tax for non-residents
setting up a joint venture in India and wholly owned subsidiary Indian company of a foreign
company proposing to undertake business activity in India.

With the opening up of world markets and globalization of trade, India has undertaken sweeping
economic reforms, including structural reforms in the customs, central excise and service tax regime
during the last decade. The rules and procedures pertaining to indirect taxes have been substantially
simplified to facilitate business activity. The manufacturing and the service sector are gearing up to meet
new challenges and a large numbers of non-residents and multinational organizations have shown
greater interest in setting up shop in India to take advantage of the strong economic outlook and an
increasingly conducive business environment.

2. Moreover, in order to attract foreign investment a number of steps has been taken by the
Government of India. One of these is setting up an Authority for Advance Rulings to give binding
rulings, in advance, on Customs, Central Excise and Service Tax matters. Advance rulings would
facilitate foreign investors by enabling them to have certainty as regards their indirect tax duty liability
for a proposed business venture in India. This is in terms of the budget speech of Finance Minister in
1998 & 1999 budgets and is of special significance in the current scenario when the Government is
putting so much emphasis on foreign direct investment. Certainty in indirect tax liability is an important
pre-requisite to take a decision on FDI. Significantly, advance rulings pronounced by the Authority are
not appealable by the department or the applicant under Customs, Central Excise and Service Tax law.

3. The Authority for Advance Rulings, Customs and Central Excise, is a high level quasi-judicial
body headed by a retired judge of the Supreme Court. Besides the Chairman, two Members (of
Additional Secretary level), experts in technical and legal matters constitute the Bench which gives
rulings on Customs, Central Excise and Service Tax matters.

4. The Scheme of Advance Rulings allows a non-resident investor setting up a joint venture in India
in collaboration with a non-resident or a resident, or a resident setting up a joint venture in India in
collaboration with a non-resident to seek, in advance, a ruling from the Authority for Advance Rulings.
Also, a wholly owned subsidiary Indian company of which the holding company is a foreign company
and which proposes to undertake any business activity in India can seek an advance ruling. Advance
rulings can be soughtin respect of the following:-

   (i)     classification of goods and services under the Customs Tariff Act, 1975, the Central Excise
           Tariff Act, 1985 and Chapter V of the Finance Act, 1994 (Service Tax Law),
   (ii)    principles of valuation under the Customs Act, 1962, the Central Excise Act, 1944 and the
           Finance Act, 1994 (Service Tax),
   (iii)   applicability of exemption notifications issued under Section 25 of the Customs Act and
           Section 5A of the Central Excise Act and under Service Tax law,
   (iv)    admissibility of credit of, input duty and service tax.

5.      These rulings would indicate, in advance, the tax liability in respect of an ‘activity’, viz, import,
export, production or manufacture of goods and rendering of taxable services, proposed to be undertaken
by a joint venture/wholly owned subsidiary. Advance Ruling is statutorily required to be deliverd by the
Authority within ninety days. The process of seeking a ruling is very simple, inexpensive, expeditious
and transparent. All accepted judicial norms are followed before a ruling is given.

6.      Apart from providing certainty as regards the duty/tax liability of the applicant (as it is also
binging on the concerned Commissioner subject to the law and facts remaining unchanged) and ruling
out changes of subsequent litigation, it would also assist the foreign investor to work out the economic
viability of the proposed project in India.

7.      This scheme for providing binding and authoritative advance rulings to the non-residents through
a statutory authority is an innovation, which is unique in many ways in comparison to similar schemes
existing elsewhere in the world. With the introduction of this scheme there is hardly any scope for
apprehension in the minds of the non-resident investor pertaining to important customs, central excise
and service tax matters in respect of their business and investment transactions in India.

8.     A Nominal fee of Rs. 2500/- (about US$ 50 is payable at the time of making the application for
seeking an advance ruling. The brochure containing the application form and guidance notes can be
obtained by writing to Secretary, Authority for Advance Rulings, 4th Floor, Hotel Samrat, Kautilya
Marg, Chanakyapuri, New Delhi – 110021, India or by Sending a fax (fax number 91-011-6876410).
Further information or any clarification can also be obtained from the Authority at telephone numbers
91-011-26876729 /91-011-26876412 or by e-mail : and from the website :

9.     Names and telephone numbers of officers of the Authority who can be contacted for any further
information are given below:

       Name of the Officer           Telephone Number      Fax Number            Email
       Shri Atul Gupta               91-11-26/876729       91-11-26876729
       (Addl. Commissioner)

       Shri Vijay Kumar              91-11-26876412        91-11-6876410
       (Joint Commissioner)

Website :

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