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Corporate News *  Missing seized records must be considered while testing ITC claim; duplicate GST demands ordered corrected: Delhi High Court. *  GST appeal can’t be rejected without addressing taxpayer’s grounds: Allahabad High Court. *  Surplus IGST credit can offset CGST, SGST shortfall: GSTAT. *  GST refund can’t be denied when cancelled airfares are returned with tax: GSTAT. *  3 Hearing notices issued within 2 minutes: Gujarat High Court flags portal flaw, seeks report. *  GSTR-9, GSTR-9C filing for FY 2025-26 enabled; pending GSTR-1 and GSTR-3B must be filed first. *  Dupattas are exempt fabrics, can’t be taxed as fibres at 4%: Madras High Court. *  Full transitional credit allowed on capital goods received after GST rollout: GSTAT denies Rs. 6.99 lakh export duty credit. *  GST return mismatch alone can’t justify fraud proceedings: GSTAT orders fresh adjudication under section 73. *  Supplier found non-existent later can’t alone justify input tax credit denial: GSTAT. *  GST interest stops once tax reaches government account, can’t run until return filing: GSTAT. *  Cancelled flat booking- GST refund can’t be denied without excluding COVID period from limitation: GSTAT. *  India notifies rules of origin for India–New Zealand FTA. *  Incomplete E-bike kits classifiable as complete vehicles, but not eligible for CKD duty concession: CESTAT. *  Same GST rate on main input and output can’t by itself bar inverted duty refund: GSTAT. *  Unjust enrichment doesn’t apply to customs refunds from assessments finalised before July 13, 2006: Gujarat High Court. *  CENVAT credit can’t be denied solely because plant And machinery are embedded in earth: Karnataka High Court. *  DFIA exports ineligible for RoDTEP benefits; customs directs repayment with applicable interest. *  Second E-Way bill alone doesn’t prove another supply: GSTAT. *  Bail denied in Rs. 1.19 crore fake GST refund case over risk of accused absconding again: Punjab and Haryana High Court. *  GST registration can be restored after revocation deadline if outstanding dues are paid: Gauhati High Court. *  Multiple GST proceedings over same suppliers: Calcutta High Court directs dept. to share findings for adjudication. *  E-Governance portal services not OIDAR, fixed deposit interest not taxable: CESTAT. *  Rs. 500 Stamp duty required on authority letters for CAs, CMA and GST practitioners in Pune GST division.  *  Rs. 1.10 crore GST refund must be paid in cash after business closure: Allahabad High Court. *  Godown rent attracts 18% GST even when used exclusively for exempt agricultural warehousing: AAR. *  GST portal launches "Multi-State Registration" facility: one master TRN for registration applications across multiple States/UTs. *  RoDTEP scheme extended till 31st December, 2026.  *  Mere disagreement with order can’t override Rs. 20 lakh appeal limit: GSTAT. *  Customs interest can’t be backdated before confiscation liability is determined; nearly 8 year period excluded: Delhi High Court.
Subject News *  GST summons: anticipatory bail maintainable without arrest order, but relief denied in evasion case: Allahabad High Court. *  GST Appeal can’t be decided without hearing taxpayer’s objections to fresh evidence: Allahabad High Court. *  GST ITC can’t be reversed merely because supplier grants discount without reducing tax liability: GSTAT. *  Mere quoting of GST provision is not a valid charge: GSTAT quashes ITC denial. *  Personal hearing mandatory before adverse GST order, even without taxpayer’s request: Rajasthan High Court. *  Parallel bail pleas without full disclosure amount to abuse of process Rs. 43.08 crore GST case sent for fresh hearing: Supreme Court. *  GST refund based on unchallenged advance ruling can’t be recovered using later circular: GSTAT. *  Payment of GST alone doesn’t end interest and penalty liability when tax and interest remain unpaid beyond 30 days of notice: GSTAT. *  GST demand over builders’ 80% procurement rule requires reasoned adjudication: GSTAT. *  Eligible ITC doesn’t automatically entitle taxpayers to compensation cess refund on domestic sales: GSTAT. *  GST confiscation order passed before reply deadline invalid: GSTAT. *  GST interest can’t be retained after tax refund on delayed export receipts: Punjab & Haryana High Court. *  GST appeal can’t be dismissed over pre-deposit shortfall without opportunity To respond: Bombay High Court. *  DGGI SCN can’t be challenged before reply and adjudication:Chhattisgarh High Court. *  GST input tax credit can’t be denied solely due to supplier’s retrospective registration cancellation: GSTAT. *  GST notice must explain fraud allegations; merely repeating section 74 Is not enough:  Himachal Pradesh High Court. *  Audit detection alone can’t justify GST fraud penalty; specific suppression must be proved: GSTAT. *  GST order uploaded only under ‘Additional Notices’ tab without separate intimation set aside: Calcutta High Court. *  Service Tax appeal can’t be rejected for missing pre-deposit proof when payment is already recorded: CESTAT. *  SGST dept. can’t hear appeal against CGST order: Calcutta High Court. *  Mere dispatch of tax order can’t prove service or make appeal time-barred: CESTAT. *  Dealer incentives can’t be taxed merely on ledger entries: CESTAT. *  DGFT orders quashed for failure to supply DRI letter relied upon in SCN: Bombay High Court. *  GST penalty u/s 122(1A) can’t apply to Pre-2021 transactions; unregistered beneficiaries also covered: Delhi High Court. *  Expired E-way bill caused by wrong PIN code can’t justify GST penalty without intent to evade tax: GSTAT. *  Used railway rails can’t be taxed as track material without proof they are fit for reuse: CESTAT. *  Earlier DGGI notice doesn’t bar separate GST demand on different issue: Delhi High Court. *  ITC dispute involves no question of law: GSTAT directs appeal to Vice-President. *  Earlier DGGI notice doesn’t bar separate GST demand On different issue: Delhi High Court. *  No E-way bill required for interstate goods movement in november 2017: GSTAT quashes detention and penalty.  

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Part 1 GST update on the case of M/s JSW Energy Ltd. dated 02.07.2018

Part 1 GST update on the case of M/s JSW Energy Ltd. dated 02.07.2018

The latest decision pronounced by the Maharashtra Appellate Authority for Advance Ruling in the case of M/s JSW Energy Ltd. vide Order No. MAH/AAAR/SS-RJ/01/2018-19 dated 02.07.2018 has been topic for discussion, particularly for the assessees availing the services of job worker. The brief facts of the case along with the reasoning are summarized as follows:

(Refer Chart Attached)

M/s JSL is sending coal to M/s JEL for generation of electricity. M/s JEL uses its own goods such as air, water for generation of electricity and sends the electricity to Maharashtra State Electricity Distribution Company Ltd. (MSEDCL). The electricity is thereafter supplied by MSEDCL to M/s JEL.

In nutshell, the issue under consideration is that whether the arrangement wherein JSL supplies coal to JEL for generation of electricity which is being received by JSL through MSEDCL amounts to job-work under section 143 of the CGST Act, 2017?
Reasoning adopted by Maharashtra Appellate Authority for Advance Ruling (AAAR) is summarized as follows:-
1. The AAAR rejected the reasoning adopted by the authority for advance ruling that since the conversion of coal into electricity amounts to manufacture as a new and distinct product emerges, the said activity cannot be considered as job-work under GST regime. The AAAR concluded that job work covers all types of processing whether or not the process amounts to manufacture.

2. It was held that the arrangement is not a job work as it does not satisfies the conditions required for treating an activity as job work under section 143 of the CGST Act, 2017. It was held that for considering an activity as job-work, it is essential that JSL sends goods to the job worker (JEL) which are either inputs or capital goods for JSL. In the present case, it was concluded that JSL procures coking coal and steam coal but it is a known fact that only coking coal is used by JSL for manufacturing steel and steam coal is exclusively used for generation of electricity through JEL. Consequently, it was held that steam coal cannot be considered as input for JSL. Moreover, it was further held that even if it is assumed that the steam coal is being used for generation of electricity which is being used by JSL for manufacturing steel, then too, the inputs being coal sent by JSL was not returned after job work by JEL to JSL. The electricity generated was sent to MSEDCL which in turn was supplied to JSL. Therefore, it was held that since third party was involved rather than two parties in a job work- one being principal and other being job-worker, the condition of section 143 was not satisfied. Therefore, it was held that the arrangement cannot be considered as job-work.

3. The AAAR also placed reliance on the Apex Court decision given in the case of M/s Prestige Engineering (India) Vs Collector of C.Ex., Meerut [1994 (73) E.L.T. 497 (S.C.)] to deny the present arrangement as job-work on the grounds that job-work envisages minimum addition in the form of material and if substantial material is being added during the course of processing by the job-worker, then the activity cannot be construed as job-work. For example, a tailor stitching a shirt from the cloth provided to him by customer will be covered by the term job-work as he is only adding thread, buttons to the shirt which are not substantial addition of goods during the process of stitching. This portion of reasoning given by AAAR has far reaching impact as it seeks to change the very perception of job-work in the GST regime. According to this reasoning, if substantial goods are used by job-worker during the course of processing, then the activity cannot be construed as job-work.

The moot question arises is that whether the decision of the Apex Court in the Prestige Engineering (India) Ltd. rendered in the context of job-work with respect to erstwhile Central Excise Law can be made applicable in the GST regime? We will discuss this aspect and certain other aspects related to job-work in the context of provisions contained in GST regime in our next update.

You can reach us at www.capradeepjain.com

 
, at our facebook page onhttps://www.facebook.com/GSTTODAYBYPRADEEPJAIN/ as well as follow us on twitter at https://www.twitter.com/@capradeepjain21

Opinion

The latest decision pronounced by the Maharashtra Appellate Authority for Advance Ruling in the case of M/s JSW Energy Ltd. vide Order No. MAH/AAAR/SS-RJ/01/2018-19 dated 02.07.2018 has been topic for discussion, particularly for the assessees availing the services of job worker. The brief facts of the case along with the reasoning are summarized as follows:

(Refer Chart Attached)

M/s JSL is sending coal to M/s JEL for generation of electricity. M/s JEL uses its own goods such as air, water for generation of electricity and sends the electricity to Maharashtra State Electricity Distribution Company Ltd. (MSEDCL). The electricity is thereafter supplied by MSEDCL to M/s JEL.

In nutshell, the issue under consideration is that whether the arrangement wherein JSL supplies coal to JEL for generation of electricity which is being received by JSL through MSEDCL amounts to job-work under section 143 of the CGST Act, 2017?
Reasoning adopted by Maharashtra Appellate Authority for Advance Ruling (AAAR) is summarized as follows:-
1. The AAAR rejected the reasoning adopted by the authority for advance ruling that since the conversion of coal into electricity amounts to manufacture as a new and distinct product emerges, the said activity cannot be considered as job-work under GST regime. The AAAR concluded that job work covers all types of processing whether or not the process amounts to manufacture.

2. It was held that the arrangement is not a job work as it does not satisfies the conditions required for treating an activity as job work under section 143 of the CGST Act, 2017. It was held that for considering an activity as job-work, it is essential that JSL sends goods to the job worker (JEL) which are either inputs or capital goods for JSL. In the present case, it was concluded that JSL procures coking coal and steam coal but it is a known fact that only coking coal is used by JSL for manufacturing steel and steam coal is exclusively used for generation of electricity through JEL. Consequently, it was held that steam coal cannot be considered as input for JSL. Moreover, it was further held that even if it is assumed that the steam coal is being used for generation of electricity which is being used by JSL for manufacturing steel, then too, the inputs being coal sent by JSL was not returned after job work by JEL to JSL. The electricity generated was sent to MSEDCL which in turn was supplied to JSL. Therefore, it was held that since third party was involved rather than two parties in a job work- one being principal and other being job-worker, the condition of section 143 was not satisfied. Therefore, it was held that the arrangement cannot be considered as job-work.

3. The AAAR also placed reliance on the Apex Court decision given in the case of M/s Prestige Engineering (India) Vs Collector of C.Ex., Meerut [1994 (73) E.L.T. 497 (S.C.)] to deny the present arrangement as job-work on the grounds that job-work envisages minimum addition in the form of material and if substantial material is being added during the course of processing by the job-worker, then the activity cannot be construed as job-work. For example, a tailor stitching a shirt from the cloth provided to him by customer will be covered by the term job-work as he is only adding thread, buttons to the shirt which are not substantial addition of goods during the process of stitching. This portion of reasoning given by AAAR has far reaching impact as it seeks to change the very perception of job-work in the GST regime. According to this reasoning, if substantial goods are used by job-worker during the course of processing, then the activity cannot be construed as job-work.

The moot question arises is that whether the decision of the Apex Court in the Prestige Engineering (India) Ltd. rendered in the context of job-work with respect to erstwhile Central Excise Law can be made applicable in the GST regime? We will discuss this aspect and certain other aspects related to job-work in the context of provisions contained in GST regime in our next update.

You can reach us at www.capradeepjain.com

 
, at our facebook page onhttps://www.facebook.com/GSTTODAYBYPRADEEPJAIN/ as well as follow us on twitter at https://www.twitter.com/@capradeepjain21

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