In re Akaltara Minerals (GST AAR Chhattisgarh)
Applicability of GST notification no. 02/2018 compensation cess (Rate) date 26-07-2018 on sale of coal reject by a power plant of Chhattisgarh state power generation company limited?
GST Notification No. 02/2018-Compensation Cess (Rate) dated 26/07/2018 extending nil liability of compensation cess on coal rejects supplied by a coal washery, will not be applicable to coal rejects supplied by a power plant and further such power plant supplying coal rejects to the applicant is liable to collect compensation cess.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, CHHATTISGARH
The applicant M/s Akaltara Minerals [herein after also referred to as the applicant] has filed an application U/s-97 of the Chhattisgarh Goods & Services Tax Act, 2017 requesting an advance ruling, on applicability of GST Notification No. 02/2018-Compensation Cess (Rate) dated 26/07/2018 on sale of coal reject by a power plant of Chhattisgarh State Power Generation Company Limited (CSPGCL) to the applicant and as to whether the said Power Plant selling coal reject to them is liable to collect compensation cess even though the applicant don’t get ITC on coal, resulting in increase in cost of coal waste.
2. Facts of the case:-
i. applicant M/s Akaltara Minerals is a partnership firm engaged in the whole sale and retail business of lime stone, dolomite, marble etc. registered under Bilaspur circle-1 with GSTIN- 22AARFAO9C1 D2Z4.
3. Contentions of the Applicant :-
The applicant has furnished following details regarding the issue for which they are seeking advance ruling:-
i. The applicant is a purchaser of coal rejects from power plant of Chhattisgarh State Power Generation Company Limited (CSPGCL) ,.The applicant wants to avail the exemption of coal cess as per GST Notification No. 02/2018-Compensation Cess (Rate) dated 26.07.2018, on the purchase of coal rejects from the Korba Power Plant of CSPGCL.
ii. In applicants view, the literal interpretation of GST Notification No. 02/2018-Compensation Cess (Rate) should not apply, instead golden rule (logical interpretation) of interpretation should apply as the word used in notification is coal washery but it should be seen as anyone dealing in the same process resulting in the same output or product.
iii. Thus, in applicants’ view the coal waste sold by Power Plant should also be not liable to compensation cess.
iv. If cess is applicable on rejected coal again then it tantamount to double taxation, as the coal on which cess has already been paid is only segregated as coal reject, hence government exempts washery. On this ground, it is clear that the applicants cess is similar to that and coal reject as a product shall be exempt from cess, as coal being sold by power plant has already suffered cess and form part of cost of the product. And if they pay cess again, it is double taxation, which is against the very base on which the GST law was framed i.e. to avoid double taxation on goods.
4. Personal Hearing:-
Keeping with the established principles of natural justice, personal hearing in the matter was extended to the applicant and accordingly their authorized representative Mr.Ankit Gupta, CA and Shri Ashutosh Shrivastava, CA appeared before the authority for hearing on 26.12.2019 and reiterated their contention. They also furnished a written submission dated, 26.12.2019 which has been taken on record.
The applicant reiterated that as per GST law, power plants can not avail credit of input tax and cess, also GST is paid by them during coal purchase. And as per GST Notification No. 02/2018-Compensation Cess (Rate) dated 26/07/2018, “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 not been availed by any person” and thus, the applicant is seeking clarification on their view that cess will not be applicable on reject coal sold by power plant as cess has already been paid on total cost during purchase of coal from coal company. They have also submitted that if Government’s intention is only to give benefit of cess to coal washery and not to rejected coal generated by others then it is a discrimination, as similar product will be taxed by two different rates. It was also their contention that Hon’ble Chhattisgarh high court in the case of M/s Pasa Associates Pvt. Ltd vs. State of Chhattisgarh and others (2015) 27STJ 440(CG) had held that if there is no rational for differentiating criteria for a class of dealers it violates the constitutional ‘guarantee for equality under Article-14 and the notification is to be struck down on that ground also.
5. The legal position, Analysis and Discussion:-
The provisions for implementing the CGST Act and CGST Act, 2017 are similar. Now we sequentially discuss the provisions that are applicable in the present case.
The applicant sought advance ruling on:-
(A) Whether Notification No-2/2018-compensation cess (Rate) will apply to power plant or not?
(B) Whether power plant selling coal reject is liable to collect compensation cess even though they don’t get Input Tax Credit on coal resulting in increase in cost of coal waste?
5.2 Section 96 of CGGST Act, 2017: Authority for advance ruling, stipulates as under:-
Subject to the provisions of this Chapter, for the purposes of this Act, the Authority for advance ruling constituted under the provisions of a State Goods and Services Tax Act or Union Territory Goods and Services Tax Act shall be deemed to be the Authority for advance ruling in respect of that State or Union territory.
Section 97(2) of CGST Act, 2017 stipulates that:-
The question, on which the advance ruling is sought under this Apt, shall be in respect of
(a) classification of any goods or services or both;
(b) applicability of a notification issued under the provisions of this Act;
(c) determination of time and value of supply of goods or services or both;
(d) admissibility of input tax credit of tax paid or deemed to have been paid;
(e) determ1ination of the liability to pay tax on any goods or services or both;
(f) whether applicant is required to be registered;
(g) whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term.
Further 103 of CGST Act, 2017 on Applicability of advance ruling stipulates that : – There advance ruling pronounced by the Authority or the Appellate Authority under this Chapter shall be, binding only
a. On the applicant who had sought it in respect of any matter referred to in sub-section (2) of section 97 for advance ruling;
b. On the concerned officer or the jurisdictional officer in respect of the applicant.
5.3 Before we delve into the issue involved on merits, it is observed that the points on which ruling has been sought by the applicant in the instant case, directly relates to liability by the supplier of goods in as much as clarification has been sought by the applicant as regards applicability of Notification No.2/2018-compensation cess (Rate) on the power plant from whom the applicant is procuring coal rejects. Thus in view of the above, it would not be out of place to mention here that in terms of section 103 of CGST Act, 2017, the ruling so sought by the applicant would be binding only on the applicant and on the concerned officer or the jurisdictional officer as above.
5.4 Now coming to the merits of the case, it is seen that the relevant Notification No. 02/2018-Compensation Cess (Rate) dated 26/07/2018 reads as under:-
[TO BE PUBLISHED IN PART II, SECTION 3, SUB-SECTION (i) OF THE GAZETTE OF INDIA, EXTRAORDINARY)
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(Department of Revenue)
Notification No. 2/2018-Compensation Cess (Rate)
New Delhi, the 26th July, 2018
G.S.R. 704(E).- In exercise of the powers conferred by sub-section (2) of section 8 of the Goods and Services Tax (Compensation to States) Act, 2017 (15 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following further amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No. 1/2017-Compensation Cess (Rate), dated the 28th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 720 (E), dated the 28th June, 2017, namely:-
In the said notification, in the Schedule, –
(i) after S. No. 41 and the entries relating thereto, the following serial numbers and the entries shall be inserted, namely:-
