TaxTMI 
TaxTMI 
2019 (6) TMI 717
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....ioner, JSW Energy Limited (JEL), which is engaged in the business of generation and sale of electricity proposed to enter into an arrangement with JSW Steel Limited (JSL) involving inter alia conversion of coal and other inputs into electricity and conversion of electricity into Steel on job work basis. In order to ascertain whether, the proposed arrangement, indeed qualifies as "job work" as defined under section 2(68) of the Central Goods and Services Tax Act, 2017 (CGST Act) and consequently whether the petitioner is entitled to benefits under the CGST and MGST, the petitioner, vide application dated 7 December 2017, in the prescribed format, applied to the Advance Ruling Authority seeking Advance Ruling on the applicability of GST to the proposed arrangement. 5] In particular, the petitioner, in its application dated 7th December 2017, after giving a gist of the proposed arrangement, sought for ruling of the Advance Ruling Authority upon applicability of GST to the following: a] Supply of coal or any other inputs on a job work basis by JSL to JEL; b] Supply of power by JEL to JSL; c) Job work charges payable to JEL by JSL. 6] The Advance Ruling ....
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....arrangement, Coal would stand consumed and therefore, was irretrievable in the same form after the conclusion of the job work. Therefore, the proposed arrangement did not fulfill the conditions prescribed in the Section 143 of the CGST Act in relation to bringing back the same inputs by the principal." [The aforesaid two grounds, are hereafter referred to as the 'new grounds'] 9] The operative portion of the Appellate Authority's impugned order dated 2nd July 2018 = 2018 (7) TMI 511 - AUTHORITY FOR ADVANCE RULING - MAHARASHTRA reads thus : "ORDER In view of the above discussions and in terms of Section 101(1) of the CGST Act 2017 and MGST Act 2017, we hold that: The processing undertaken by a person on the goods belonging to another registered person qualifies as job work even if it amounts to manufacture provided all the requirements under the CGST/MGST Act in this behalf, are met with. The transaction between the Appellant and M/s. JSL does not qualify for Job Work under Section 2(68) and Section 143 of the Said Act. The order of AAR stands modified in terms of the above order. The Appeal filed by M/s. JEL stands dismissed wit....
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....bmitting that there is neither any scope for challenge on merits nor is this a case involving violation of principles of natural justice. He submits that there is a clear distinction between orders made in adjudicatory proceedings and orders made by Advance Ruling Authority, at the invitation of a potential assessee. He submits that in the later case, it is for the proposed assessee to place all material on record before the Advance Ruling Authority and there is really no element of adjudication, as such involved. He submits that the jurisdiction of the Appellate Authority is quite wide and there can obviously be no bar to the Appellate Authority upholding the conclusion of Advance Ruling Authority albeit, on different grounds. He submits that on the facts of the present case, the view taken by the two authorities is sustainable both on facts as well as on law. He submits that there was no violation of principles of natural justice and no such complaint of violation was ever made in the course of proceedings before the Appellate Authority. He submits that no opportunity was applied for by the petitioner to produce any additional material before the Appellate Authority and therefore....
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....ed by perversity. 19] In M/s. R.B. Shreeram Durga Prasad and Fatehchand Nursing Das vs. Settlement Commission (IT & WT) and anr. (1989) 1 SCC 628 = 1989 (1) TMI 4 - SUPREME COURT, the Supreme Court was concerned with judicial review of the orders of Settlement Commission, which were alleged to have been made in breach of the principles of natural justice. The Supreme Court emphasized that principles of natural justice would certainly apply in such matters and the Settlement Commission was duty bound to adopt procedure consistent with such principles. The Supreme Court, also held that in exercise of powers of judicial review of the decision of the Settlement Commission, the Court ought to be concerned with the legality of the procedure validity and not with the validity of the order itself. The Supreme Court referred to observations of Lord Hailsham in Chief Constable of the North Wales Police vs. Evans - (1982) 1 WLR 1155, in which it is held that judicial review is concerned not with the decision but with the decision making process. 20] Therefore, in view of the aforesaid, we decline the invitation of Mr. Dada to go into the merits of the impugned orders, merely because the....
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...., would not stand fulfilled. In paragraphs 52 and 56 of the impugned order dated 2nd July 2018, the Appellate Authority has faulted the petitioner for failure to produce agreements with JSL and documentary evidences in the context of the 'new grounds' appearing in the impugned order. 24] Mr. Dada's contention that the Appellate Authority ought to have confined itself to the issue as to whether the primary ground relied upon by the Advance Ruling Authority was right or not, does not appeal to us. Looking to the scheme of the provisions dealing with advance rulings, such wider proposition urged by Mr. Dada cannot be accepted. The Appellate Authority, in a given case, may be entitled to uphold the conclusion of Advance Ruling Authority, albeit, for reasons other than reasons which prompted the Advance Ruling Authority to base its decision. Ultimately, the Appellate Authority is required to give its ruling on the question posed by taking into account the relevant circumstances and eschewing irrelevant ones. Therefore, if the Advance Ruling Authority may have missed a particular point, it is not as if the Appellate Authority is precluded from adverting to such point and basing its ru....
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....ord the petitioner an opportunity to produce documents or documentary evidences having direct bearing on the 'new grounds', in our opinion, amounts to failure on the part of the Appellate Authority to adhere to the principles of natural justice. Such failure, vitiates the decision making process and affords a good ground for interference in the exercise of powers of judicial review. The prejudice to the petitioner is quite evident in the facts and circumstances of the present case. 29] For example, in paragraph 52 of the impugned order dated 2nd July 2018 = 2018 (7) TMI 511 - AUTHORITY FOR ADVANCE RULING - MAHARASHTRA, the Appellate Authority has observed thus: "52. In the matter before us, the appellant have not submitted the following: (i) The agreement or proposed agreement between M/s. JSL and M/s. JEL for the process of job work to understand about the quantity and value of the inputs being supplied by the principal and the amount and quantity of the inputs/material being used by the job worker to the inputs supplied by the principal to carry out the job work process. (ii) The detail manufacturing process of M/s JEL for production of Electricity m....
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....eir quantity and value, being procured/purchased by the job worker, M/s. JEL, which need to be added to the inputs supplied by the Principal for converting the same into electricity, as the Principal is not supplying all the inputs and in terms of the Judgment of Apex Court, as referred above, the job worker can not make substantial addition to the inputs of the Principal to qualify for the process as job work. In light of above, we have no doubt to conclude that the activity undertaken by M/s. JEL to convert Coal, to be supplied by M/s. JSL, in electricity is not covered under the definition of Job work in terms of the CGST Act. Since goods supplied by M/s. JSL will be utilized by M/s. JEL in manufacture of new commodity i.e. electricity (though attracting NIL rate of duty), the process is manufacture and the same will be considered as supply of goods and not service." 32] Again, from the aforesaid it is apparent that the petitioner has been faulted for not providing documentary evidences during the appeal proceedings, on the aspects set out in clauses (i),(ii) and (iii) above. There is again, no dispute, that the petitioner was never called upon to produce such docume....
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....posal of the second appeal on the basis of the same. 35] Similarly, in U.R. Virupakshappa vs. Sarvamangala and anr. 2009 (2) SCC 177 = 2008 (12) TMI 800 - SUPREME COURT, the High Court, at the time of dictating the judgment in the second appeal framed a new question of law as to whether the Courts below were justified in holding that there existed a joint family and the suit properties were joint family properties. No sufficient opportunity was granted to the parties to make their submissions on this new question framed at the stage of disposal of the second appeal. In such circumstances, the Supreme Court ruled that the procedure adopted by the High Court was improper and the High Court was duty bound to give a reasonable opportunity of hearing the parties on the new question of law formulated in the second appeal. The Supreme Court held that the High Court was duty bound to put the parties to notice that the new question of law was proposed to be considered and grant time to the parties to respond such question of law so formulated. The Supreme Court held that failure to do so would constitute failure of natural justice and therefore, remand to the second Appellate Court, was ....