In re Eastern Coalfields Ltd. (GST AAR West Bengal)
Summary: The West Bengal Authority for Advance Ruling (AAR) considered whether Eastern Coalfields Limited (ECL) could reclaim Input Tax Credit (ITC) that had earlier been reversed pursuant to an advance ruling dated 09.08.2021, in light of the retrospective insertion of Section 16(5) into the CGST Act by the Finance (No. 2) Act, 2024 with effect from 01.07.2017.
ECL had entered into a Longwall Mining Project Agreement with China Coal Overseas Development Co. Ltd. (CODCO) for coal extraction. Under the arrangement, CODCO assigned its rights and obligations under the service contract to Gayatri Projects Limited (GPL), with ECL’s approval. GPL subsequently issued invoices for services rendered during January, February, and March 2020, and ECL availed ITC on the basis of these invoices.
However, GPL filed its GSTR-1 and GSTR-3B returns relating to these supplies only in November 2020. ECL had earlier approached the AAR seeking clarification on the admissibility of ITC under such circumstances. By order dated 09.08.2021, the AAR held that ECL was not entitled to the ITC and directed reversal of the credit in view of Rule 36(4) of the GST Rules, read with relevant circulars. ECL accordingly reversed the ITC.
