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TMI Blog2022 (10) TMI 909X X X X Extracts X X X X X X X X Extracts X X X X ..... d to get raw coal washed before captive consumption for meeting percentage ash stipulations as the ash content in raw coal being received from CIL sources is generally on higher side. (3) On the quantity procured by the Applicant from CIL Sources. Applicant pays GST @ 5% IGST along with Compensation Cess @ Rs. 400/- tonne to its supplier (CIL sources) in compliance with provisions contained in the statute read with rules and notification. (4) Since such raw coal procured by Applicant is mandatorily to be washed before captive consumption. Applicant has engaged some washeries in private sector on job work basis for the job of raw coal beneficiation who in turn supply washed coal to Applicant. (5) However, in the process of raw coal beneficiation by washery /job worker, certain low quality coal is also generated (having ash more than the prescribed %) which is commonly referred to as 'coal rejects' which is disposed off/soId directly by the washery/job worker in an environment friendly manner. (6) Terms of the engagement with washery job worker, inter-alia, include:- a) That washery/job worker shall directly lift raw coal from CIL sources on behalf of Applicant by road; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BY THE APPLICANT:- 5.1 The applicant has made the following submissions at the time of filing of advance ruling application:- (1) for generation of electricity, inter alia, an essential raw material is 'coal' which Applicant procures from Coal India Ltd (CIL) sources However, as per the guidelines laid down by Ministry of Environment and forest. Applicant having its plants located at long distance from Coal Mines are mandatorily required to get raw coal washed before captive consumption for meeting percentage ash stipulations as the ash content in raw coal being received from CIL sources is generally on higher side. (2) Since such raw coal procured by Applicant is mandatorily to be washed before captive consumption. Applicant has engaged some washeries in private sector on job work basis for the job of raw coal beneficiation who in turn supply washed coal to Applicant. In the process of raw coal beneficiation by washery/job worker certain low quality coal is also generated (having ash more than the prescribed %) which is commonly referred to as 'coal rejects which is disposed off/sold directly by the washery/Job worker in an environment friendly manner. (3) Terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Cess paid by the Applicant on purchase of 200 tonnes (out of total 1000 tonnes) of s raw coal from CIL or CCI sources 5.3 The applicant has further made the following additional submissions dated 17.02.2022, regarding certain queries raised by Hon'ble AAR and documents sought:- (i) That proviso to sub-section (2) of Section 98 of the CGST Act, 2017 provides "Authority that not admit the application where the question raised in the application is already pending or decided in any proceedings in the case of an applicant under any of the provisions of this Act." (ii) That, the questions with respect to the taxability & eligibility of Input tax Credit was raised by the Applicant at the time of filing of Advance Ruling application in January 2020 when no proceedings with respect to coal rejects were pending against the Applicant and thus, application so filed by the Applicant is a valid application (iii) That, enquiry was initiated by the office of DGGI in September 2020. i.e after more than 5 months of filing application with Hon'ble AAR. Punjab and thus, since no proceeding was pending then, proviso to sub-section (2) of Section 98 ibid, must not be applicable upon th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so much quantity which is attributable to coal rejects) or whether Appellant has toi avail ITC as per Section 17 of the Act read will. Rule 42 of the Rule i.e. In proportionate formulae. Therefore, in case Appellant has avail ITC on coal rejects as per Rule 42 of the Rules. Appellant has to first take into account the entire Common credit which might involve a number of Input/Input Services such as.- * Entire Tax paid on purchase of raw coal from CCL or CH sources * Entire tax paid by the Appellant on beneficiation /Job work charges collected by Monnet for processing on raw coal: * Entire tax paid by the Appellant on transportation charges collected by Monnet for transportation of raw coal from mines to washery: * Entire tax paid by the Appellant on certain administrative expenses, like Rent paid for office as well as plant (if any). Telephone Expenses, Security Guard expenses, Accounting, Auditing or Legal Services (if any). Office or Factory maintenance expense (if any), etc. Further, all the similar expenses which are in the nature of common expenses for providing both output supply of electricity & coal rejects has to be first availed by the appellant and then, admissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f GST and Compensation Cess of raw coal brought from its supplier and transferred to washery/job worker for cleaning? 3. If the answer to above question is yes and ITC is admissible, what is the admissible proportion of Input Tax Credit? Applicant is engaged in generation, transmission and distribution of electric energy and having both taxable and exempted outward supplies, for generation of electric energy, applicant buys raw coal form its vendor namely Coal India Limited (CIL) and its subsidiaries' for use in thermal power plants situated in the State of Punjab As per the guidelines laid down by the Ministry of Environment and forest. Govt of India, raw coal is washed before captive consumption for meeting percentage of ash specifications as ash content in raw coal received from CIL is higher. But during this whole process. raw coal, washed coal and coal rejects remains the property of Applicant. Applicable HSN code for coal is 2701 and taxable at 5% GST Rate + Rs. 400 PMT Compensation Cess. Chapter Heading, Sub-Heading/Tariff item Description of Goods 2701 Coal, briquettes, avoids and similar solid fuels manufactured from coal The first issue on which advance ruling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed; (aa) the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37; (b) he has received the goods or services or both. Explanation.- For the purposes of this clause, it shall be deemed that the registered person has received the goods or, as the case may be, services- (i) where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise; (ii) where the services are provided by the supplier to any person on the direction of and on account of such registered person. (c) subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of input tax credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AR had been submitted, Further, submitted that the information was generic and not specific to Coal rejects. Applicant was asked to share the complete details of the proceedings. Applicant also submitted synopsis cum additional submissions which were brought on record. Next hearing was fixed for 11.02.2022, wherein the applicant sought time to submit details of DGGI investigation and copies of Invoices. In the next hearing dated 18.02.2022. the applicant submitted the additional documents sought which were also brought on record. On the last hearing of the case i.e. on 05.08.2022. The applicant submitted that they have nothing more to submit on the matter Accordingly the proceedings of the case were concluded. 8. DISCUSSIONS AND FINDINGS:- 8.1 The submissions made by the applicant in his advance ruling application. Additional submissions and the submissions made at the time of personal hearings have been carefully examined and analysed. 8.2 The applicant is a Punjab Government undertaking engaged in generation, transmission and distribution of electricity and is registered under Goods and Service Tax under registration No. 03AAFCP51 20Q1ZC. Transmission or distribution of electr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heading 2701. Also, vide press release dated 18-01-2018 issued by the Press Information Bureau, Government of India, Ministry of finance recommended for changes in CGST/IGST Rate and clarifications in respect of GST Rate on certain goods as per discussions held in the 25th GST Council Meeting held on 18th January 2018. which is extracted as under: Sr.No. Chapter /Heading / Sub-Heading/Tariff-item Description Present Rate Modification /Clarification recommended 3 2701 Coal rejects 5% + Rs. 400 PMT Compensation Cess Coal rejects fall under heading of 2701 and attract 5% GST and Rs. 400 PMT Compensation Cess Accordingly as per above clarification. Coal rejects are to be classified under HSN 2701 and are taxable at 5% GS T Rate + Rs. 400 PMT Compensation Cess. It is pertinent to mention here that vide Notification no. 02/2018-compcnsalion cess (Rate) dated 26.07.2018 Nil rale of GST compensation cess on Coal rejects supplied by a coal washery, arising out of coal on which compensation cess has been paid and no input Tax credit thereof has been availed by any person vide notification No. 02/2018- compensation cess (Rate) dt. 26.07.2018 is notified. As the applicant is not co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of and on account of such registered person. (c) subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of input tax credit admissible in respect of the said supply; and (d) he has furnished the return under section 39: Provided that where the goods against an invoice are received in lots or instalments, the registered person shall be entitled to take credit upon receipt of the last lot or instalment:" and. Section 17. Apportionment of credit and blocked credits. (1) Where the goods or services or both are used by the registered person partly for the purpose of any business and partly for other purposes, the amount of credit shall be restricted to so much of the input tax as is attributable to the purposes of his business. (2) Where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cles, vessels or aircraft referred to in clause (a) or clause (aa): Provided that the input tax credit in respect of such services shall be available- (i) where the motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) are used for the purposes specified therein; (ii) where received by a taxable person engaged- (I) in the manufacture of such motor vehicles, vessels or aircraft; or (II) in the supply of general insurance services in respect of such motor vehicles, vessels or aircraft insured by him; (b) the following supply of goods or services or both- (i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, leasing, renting or hiring of motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) except when used for the purposes specified therein, life insurance and health insurance: Provided that the input tax credit in respect of such goods or services or both shall be available where an inward supply of such goods or services or both is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions as prescribed under Section 16 of CGST Act. 2017 and if the type of ITC do not fall under the categories prescribed under Section 17 of CGST Act, 2017. the applicant is eligible to avail Input Tax Credit of GST and Compensation Cess of raw coal brought from its supplier and transferred to washery/job worker for cleaning. But it is imperative to discuss Section 19 of CGST Act, 2017 as the applicant is directly sending its inputs to the premises of its job-worker i.e. Coal Washery Units. Section 19. Taking input tax credit in respect of inputs and capital goods sent for job work- (1) The principal shall, subject to such conditions and restrictions as may be prescribed, be allowed input tax credit on inputs sent to a job worker for job work. (2) Notwithstanding anything contained in clause (b) of sub-section (2) of section 16 the principal shall be entitled to take credit of input tax on inputs even if the inputs are directly sent to a job worker for job work without being first brought to his place of business. And, therefore, as provided in terms of above Section 19 of the CGST Act & PGST Act, 2017 that "principal" shall be entitled to avail ITC in relation to goods sen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposal of the Applicant is not as per the provisions of the CGST Act, 2017 and the rules and corresponding PGST Act, 2017 and the rules made there-under. In terms of Section 11 of The Goods And Services Tax (Compensation to States) Act, 2017. the provisions of the Central Goods and Services Tax Act. 2017. the Punjab Goods and Services Tax Act, 2017 and the rules made there-under, including those relating to assessment, input tax credit, non-levy, short-levy, interest, appeals, offences and penalties, shall, as far as may be, mutatis mutandis, apply, in relation to the levy and collection of the cess leviable under section 8 on the intra-State supply of goods and services, as they apply in relation to the levy and collection of central tax & state tax on such intra-State supplies under the said Act or the rules made there under. Accordingly, it can be stated that the formula prescribed under Rule 42 of CGST & PGST Rules, 2017 for manner of determination of input Tax credit in respect of inputs or input services and reversal thereof will be applicable in both cases i.e GST and Compensation Cess. The applicant has also requested to allow reversing the GST and Compensation cess in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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