TaxTMI 
TaxTMI 
2021 (5) TMI 1052
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....e Coal Blocks). ii. RVUNL issued tender inviting bids for selection of suitable persons to enter into a joint venture arrangement with RVUNL and form a joint venture company to undertake coal mining and arrange for its transportation and delivery to the Thermal Power Stations ("TPS") of RVUNL in the State of Rajasthan. iii. Adani Enterprises Limited ("AEL") was selected as a successful bidder, and accordingly incorporated a Joint Venture Company named Parse Kente Collieries Limited ("PKCL'') the Applicant herein. RVUNL holds 26% equity while AEL holds 74% equity in the Applicant company. A Coal Mining and Delivery Agreement ("CMDA") was entered into on 16th July, 2008 between RVUNL and the Applicant. Broadly summarized, the salient features of the CMDA are as under: (a) The Applicant would carry out all Works, as defined therein, from identification of techno commercially viable coal blocks to coal mining and arranging for delivery of coal to RVUNL's TPS; (b) All expenses incurred for the Works are to be borne by the Applicant, including all expenses in relation to the cost of acquisition of land/lease of land, fees and arranging of c....
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....ayable in cash, while the third is in respect of the fee payable in kind (by way of transfer of property in the reject coal). The first invoice is for 90% of the mining fee payable in cash, which is computed with reference to the quantity of washed coal at the contract price as per CMDA. The second invoice is for the balance 10% of the mining fee payable in cash, computed with reference to the quantity of washed coal at the contract price as per CMDA. These two invoices are issued by PKCL, Chhattisgarh on RVUNL, Chhattisgarh. GST at the rate of 18% under heading 998622 is charged. The third invoice issued by Applicant on RVUNL, Chhattisgarh is also for the mining fee, computed with respect to the property in the reject coal transferred to PKCL in terms of the CMDA. Here too, GST is charged at the rate of 18% under heading 998622; On the basis of the two invoices for mining fees payable in cash issued by PKCL, AEL raises back to back invoices. RVUNL, Chhattisgarh also issues two invoices, one for the washed coal on RVUNL's TPS where such washed coal is delivered. The other invoice is on the Applicant for the coal rejects with the following des....
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....n Cess paid by RVUNL and shown in the taxable invoice issued by RVUNL in relation to coal rejects. The Applicant in fact, did not charge or collect Compensation Cess from its customer to whom coal rejects were sold. (p) While the Applicant showed the payment of Compensation Cess, which was paid after availing ITC of the Compensation Cess paid by RVUNL, the Applicant issued a Credit Note to the customer for the same. The Applicant, in other words, did not collect the Compensation Cess on coal rejects from its customer prior to 26^th July, 2018 also. 3. It is in this context that the Applicant is seeking ruling on the following issues:- I. Whether Compensation Cess is leviable on total quantity of raw coal or washed coal? II. Whether coal rejects supplied by Coal Washery are exempt from levy of Compensation Cess once Compensation Cess on raw coal or, washed coal and coal rejects, as the case may be, is discharged? III. If the answer to Question (II) above is in the affirmative, whether subsequent supply (or sale) of coal rejects attracts Compensation Cess? 4. Personal Hearing:- Keeping with the established principles of natural justice, pe....
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.... Authority under this Chapter shall be binding only - a. On the applicant who had sought it in respect of any matter referred to in sub-section (2) of section 97 for advance ruling; b. On the concerned officer or the jurisdictional officer in respect of the applicant. Thus in view of the above section 103 of CGST Act, 2017, the ruling so sought by the Applicant would be binding only on the Applicant and on the concerned officer or the jurisdictional officer as above. 5.2 Now coming to the merits of the case it is seen that Notification No. 01/2017-compensation cess (Rate) dated 28.06.2017 prescribes rate of Compensation cess to be levied on the intra-state or inter-state supplies of certain goods mentioned in said notification. Serial No. 39 of the Notification No. 01/2017-compensation cess (Rate) doted 28.06.2017 prescribes the following rates of compensation cess:- S.No. Chapter / Heading / Sub-heading / Tariff item Description of Goods Rate of goods and services tax compensation cess 39. 2701 Coal; briquettes, ovoids and similar solid fuels manufactured from coal. Rs. 400 per tonne Thus, as per Notification No. 01/2017-compensat....
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....2018, published vide number G,S.R.93(E), dated the 25th January, 2018. 5.4 Thus the above Notification prescribes nil compensation cess on coal rejects supplied by a coal washery, arising out of coal on which compensation cess has been paid and no input tax credit thereof has been availed by any person. 5.5 Now coming to the case in hand, the Applicant in their application has submitted that as per Coal Mining and Delivery Agreement ("CMDA") dated 16th July, 2008, the Applicant would carry out all Works, as defined therein, from identification of techno commercially viable coal blocks to coal mining and arranging for delivery of coal to RVUNL's Thermal Power Station and that the Applicant is required to establish a Coal Washery and deliver the washed coal of the required specifications to RVUNL. Also as per clause 5 of Coal Mining and Delivery Agreement ("CMDA") dated 16th July, 2008 between RVUNL and the Applicant, furnished by the Applicant along with their application, the Applicant is entitled to reimbursement of various expenses such as railway freight, access charges for the delivered coal, service tax and other taxes including any taxes to apply in the future, at a....
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....cil in, its 28th Council Meeting held on 21.07.2018 recommended that coal rejects be granted an exemption from the levy of Compensation Cess. The recommendation of the Council reads as under:- "Exemption from Compensation Cess to coal rejects from washery (arising out of cess paid coal on which ITC has not been taken)" 5.7 It was on the basis of the above recommendation, that the instant Notification No. 2/2018-Compensation Cess dated 26th July, 2018 (read with corrigendum F. No. 354/255/2018-TRU(Pt-II) dated 02.08.2018) was issued, amending Notification No. 1/2017 - Compensation Cess, thereby inserting a new Entry 41A, which read as under - "41A 27 Coal rejects supplied by a coal washery, arising out of coal on which compensation cess has been paid and no input tax credit thereof has been availed by any person. NIL"; 5.8 The Applicant has contended that it is entitled to supply the reject coal without paying any Compensation Cess in terms of Entry 41A of Notification 01/2017-Compensation Cess, as amended, in as much as, i. It is a coal washery as in terms of the CMDA, it was required to set up a coal washery, where the raw coal was required to be wash....
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....nd rejects in the said CMDA. RVUNL Chhattisgarh transfers washed coal to RVUNL Rajasthan. This is a supply under Section 7 of the CGST Act, 2017. RVUNL Chhattisgarh and RVUNL Rajasthan are distinct persons having separate GST registrations. Consequently, RVUNL Chhattisgarh, as required under law issues a taxable invoice in the name of RVUNL Rajasthan for the quantity of the washed coal supplied. The Applicant have submitted that apart from GST at the rate of 5%, Compensation Cess at the rate of Rs. 400 per metric tonne is also paid and the same stands mentioned in the tax invoice issued by RVUNL Chhattisgarh to RVUNL Rajasthan. 5.13 The quantity of rejects remains at the washery. There is no physical movement of the rejects from the washery to RVUNL. The relevant clause in the CMDA on rejects is set out herein. 3.4.1.................... The company acknowledges that the entire coal mined from the coal block shall, except as provided in Clause no. 4.5.4, also be the property of RVUNL except for the coal washery rejects not exceeding 29% (the "Rejects") which shall be the property of the Company and shall be disposed by the company as determined by the Company's Board....
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.....3 of the impugned CMDA covers the aspect of establishment of coal washery and it stipulates that the 'Applicant shall establish a Coal washery and deliver coal of the required specifications in accordance with the terms and conditions of the Agreement and that the rejects remaining after washing shall be the property of the Applicant. It is also seen that the Applicant in their application before us, at point no. 7 have intimated that the said mining contractor AEL has set up a coal washery close to the mine pithead and upon mining of the raw coal, washes the same. Thus, the obligation to undertake washing under the CMDA squarely lies upon the Applicant and in the instant case the Applicant gets the coal washed by AEL, on sub-contract basis, thereby the obligation to undertake washing is on the Applicant. This is also apparent from the fact that the Applicant raises an invoice on RVUNL for mining services in respect of coal rejects. 6.2 The Applicant have also submitted that the liability of GST including compensation cess stands discharged on the total quantity of coal arising out of mining, which follows that the coal rejects which are supplied by RVUNL to the Applicant a....