In re Kolhapur Foundry and Engineering Cluster (GST AAR Maharashtra)
The question raised by the applicant is ‘The used waste sand which is of the value NIL Refer separate Valuation Certificate by Engineer) will have any impact on Valuation?.’
The jurisdictional officer has submitted that, as regards the second question, value of inward supply does not have direct bearing on the outward value in this case, since the applicant has admitted that the inward supply of the waste sand is at Rs. Nil. As such, there is no impact of inward value on the outward supply. The jurisdictional officer has also submitted that Socio-Ecological parameters in the said case is already taken into account by the system, as 83% of setting cost is born by Central and’ State governments together and hence, may not cause any impact on taxation.
The applicant seeks to know whether the consideration of ‘NIL’ value for the input i.e. used sand, will have any impact on valuation and whether there understanding to consider the ‘Nil’ value of the used waste sand in valuation (no impact) is appropriate. It appears, from the submissions made by the applicant that, the value of input is considered by the applicant to be Nil is probably because they are not paying consideration for receipt of such used sand. We are of the opinion that in cases like in the subject matter, the value of inward supply will always have a bearing on the value of outward supply. In the subject case, the applicant has themselves admitted that the value of input used sand is “NIL” and the same has been accepted by the jurisdictional office also and not disputed.
To surmise, it appears from the applicant’s submissions that their rate of Rs. 2.50 per kg. on output supply of sand has taken into account the valuation of input sand at ‘NIL’ value. In normal situations, in the subject case, if there is a price attached to the input supply of used sand, then it may have a proportionate impact on the rate of outward supply of sand.
For reasons as discussed in the body of the order, the question is answered thus –
Question. The used waste sand which is of the value ‘Nil’ (Refer separate Valuation Certificate by Engineer) will have any impact on valuation?
Answer : Answered in the affirmative.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING,MAHARASHTRA
PROCEEDINGS
(Under Section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
The present application has been filed under Section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as ”the CGST Act and MGST Act” respectively ] by Kolhapur Foundry and Engineering Cluster, the applicant, seeking an advance ruling in respect of the following questions.-
1.Whether the activity of Applicant is Supply of Goods or Supply of Job Work Services?
2. The used waste sand which is of the value ‘Nil’ (Refer separate Valuation Certificate by Engineer) will have any impact on valuation?
At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression ‘GST Act’ would mean CGST Act and MGST Act.
2. FACTS AND CONTENTION – AS PER THE APPLICANT
2.1 The submissions made by the Ms. Kolhapur Foundry & Engineering Cluster, the applicant is as under:-
2.2 Applicant, is involved in promotion of commercial activities relating to Foundry Industry & preservation of environment through its Sand Reclamation Plants.
2.3 Used/waste sand of Foundry Industry is neither capable of being reused nor being capable of being dumped anywhere in open, due to environmental reasons like, contamination of fertile Soil/ water pollution. Applicant processes such waste sand vide heat treatment & various other set of small procedures and sand is thus reclaimed and made re-usable.
2.4 Following are the main steps in producing the reclaimed sand:
(i) Waste Sand is received at applicant’s KFEC plants from various Foundries. As there is no commercial use of this used/waste sand, the value is treated as Zero.
(ii) The used sand received from various foundry units are stored together at one location without segregation before it is used for production activity.
(iii) The sand is processed and approximately 80% of the Input (Waste Sand) is recovered as finished material (Fresh Sand). The 20% loss includes the layer of chemicals which was affixed on the surface of the Sand during Foundry operations & clay, rubber/wooden/metal partials mixed with sand during foundry operation & other sand clots etc.
(iv) During this process the chemical properties of Sand are changed in such a manner due to heat and other processes, that the quality of the reclaimed sand is better for foundry use as compared to freshly mined sand.
2.5 The following are the applicable rate of Tax considering the HSN/SAC Codes:
