JSW Energy Ltd. – 2020 (35) G.S.T.L. 456 (A.A.A.R. – GST – Maharashtra)

Supply of coal or any other inputs by principal to job worker for generation of electricity to be construed as job work and No GST will be leviable on this supply where as GST will be payable on Job charges

Facts- JSW Energy Limited, (hereinafter referred to as “the Appellant”) is engaged in the business of power generation and having Goods and Services Tax (‘GST’). JSW Steel Limited (“JSL”), having GST Registration No. 27AAACJ4323N1ZG is engaged in manufacture and supply of steel. The manufacturing activity undertaken by JSL requires power on a continuous and dedicated basis. For the said purpose, JSL and the Appellant (both being related party in terms of the Central Goods and Services Tax Act, 2017 (‘CGST Act’) propose to enter into an arrangement (hereinafter referred to as the ‘Job Work Arrangement’) for the purpose of supply of coal and processing of the same into power for captive use by JSL.

The Appellant had approached the Advance Ruling Authority (AAR) for seeking an advance ruling under Section 95(a) of the CGST Act, for determination of the applicability of GST on the following issues :

(I) Supply of coal or any other inputs on a job work basis by JSL to JEL

 (II) Supply of power by JEL to JSL

(III) Job work charges payable to JEL by JSL Order passed by AAR :

The Order dated 5-3-2018 has been passed by AAR holding that the proposed transaction amounts to manufacture and therefore it would not qualify as ‘job work’ under GST.

The Impugned Order has not responded on the GST implication in respect of the coal and other inputs supplied by the JSL to Appellant on the basis that the transaction pertains to GST liability of JSL and not of Appellant.

Being aggrieved by the Impugned Order, the Appellant has filed the appeal before this appellate authority making prayer to set aside the said impugned order passed by the Advance Ruling Authority.

Held – The App. A.A.R. from the submissions and contention put forth by the Appellant held that coal is an input for JSL, as the same is used for the generation of electricity, which in turn is used for the manufacture of the final product i.e. steel. The Appellant has contended that there is no bar on the involvement of the third person in the transportation of the inputs from the principal to the job worker, and from the job worker to the principal. The proposed arrangement under consideration is satisfying the condition laid down under Section 143(1)(a) of the CGST Act, 2017 in respect of bringing back of the inputs by the principal i.e. JSL from the job worker’s premises i.e. JEL, after the completion of the job work. Thus, the earlier observation in this regard is sought be revised. Hence, the supply of coal or any other inputs by the principal i.e. JSL to the Appellant i.e. JEL for generation of electricity will be construed as job work. Accordingly, no GST will be leviable on this supply. Finally, the job work charges payable to JEL by JSL will be subjected to GST in terms of the provisions laid out in Notification No. 11/2017-C.T. (Rate), dated 28-6-2017 as amended by various subsequent notifications.


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