Section 386 — Advance ruling to be void in certain circumstances. Successor to s.245T of the 1961 Act.
Section 386 is in Chapter XVIII — Appeals Revisions and Alternate Dispute Resolutions, which runs from section 356 to section 389.
Sub-section (1) empowers the Board for Advance Rulings, on a representation made by the Principal Commissioner or Commissioner or otherwise, to declare by order that an advance ruling pronounced under section 384(6) is void ab initio if it finds the ruling was obtained by the applicant by fraud or misrepresentation. Once declared void, all the provisions of the Act apply to the applicant as if the ruling had never been made, and the period from the date of the advance ruling to the date of the order under this sub-section is excluded in applying them. Sub-section (2) requires a copy of the order to be sent to the applicant and to the Principal Commissioner or Commissioner.
An advance ruling binds the Department on the facts put to it, so a ruling procured on false facts would otherwise lock in a wrong result; the section lets it be unwound entirely. Excluding the intervening period stops the applicant profiting from the time the ruling was standing when limitation is applied.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Period excluded when applying the Act after a ruling is declared void | The period from the date of the advance ruling to the date of the order under sub-section (1) | Excluded in applying all the provisions of the Act to the applicant as if the ruling had never been made | Sub-section (1) |
The consequence is not merely that the ruling stops binding — it is treated as never having been made, so the applicant's position is reopened from the beginning. The exclusion of the intervening period is what makes that practical: time that ran while the ruling stood does not count, so limitation periods that would otherwise have expired remain available to the Department. The Board can act of its own motion; a representation by the Principal Commissioner or Commissioner is one route but the text says "or otherwise".
A company obtains an advance ruling under section 384(6) on facts it had misstated to the Board for Advance Rulings. Three years later the Principal Commissioner makes a representation, and the Board, finding the ruling was obtained by misrepresentation, declares it void ab initio. The Act then applies to the company as though the ruling had never been made — and the three years during which the ruling stood are excluded in applying it, so limitation that would otherwise have expired has not, and the assessment the ruling had kept at bay can still be made. The ground is narrow, though: only fraud or misrepresentation by the applicant will do.
In an order of the Board for Advance Rulings declaring a ruling void ab initio, a copy of which sub-section (2) requires to be sent to the applicant and to the Principal Commissioner or Commissioner, and then in the assessment or other proceeding that follows as if no ruling had ever been given.
it may by order, declare such ruling to be void ab initio and thereupon, all the provisions of this Act shall apply (after excluding the period beginning with the date of such advance ruling and ending with the date of order under this sub-section) to the applicant as if such advance ruling had never been made
See the full 1961 to 2025 concordance.