Case Law Details
In re Punjab State Power Corporation Limited. (GST AAAR Punjab)
The recent case involving Punjab State Power Corporation Limited (PSPCL) and the Authority for Advance Ruling, Punjab (AAR Punjab) has brought to light critical issues related to the taxation of coal rejects under the Goods and Services Tax (GST) regime. The AAR Punjab’s order, dated September 29, 2022, raised questions regarding the classification and taxation of coal rejects and the eligibility of Input Tax Credit (ITC) for the appellant. In response to the appellant’s appeal, the Appellate Authority for Advance Ruling, Punjab, has taken a significant step by remanding the case to the AAR for re-examining the maintainability of the application under the relevant provisions of the GST Act.
Background: PSPCL, a government undertaking engaged in electricity generation and distribution, sought an Advance Ruling from the AAR Punjab on the taxability of coal rejects generated during the washing process of raw coal procured from Coal India Limited. The AAR Punjab, in its order, classified coal rejects under HSN 2701 and deemed them taxable at a 5% GST rate along with Rs 400 per metric tonne as compensation cess.
The appellant raised concerns about the lack of clarity in the ruling, particularly regarding the admissible proportion of ITC for raw coal used in the generation process. The AAR Punjab, relying on Rule 42 of CGST and PGST Rules, 2017, determined the admissible ITC in proportion to taxable and exempt turnover.
Appeal and Personal Hearing: In response to the AAR Punjab’s order, PSPCL filed an appeal with the Appellate Authority for Advance Ruling, Punjab. The appellant contested the lack of clarity in the ruling on the admissible proportion of ITC and sought further clarification on Rule 42 of the CGST Rules.
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