TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 277
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....we would like to make it clear that the provisions of both the CGST Act and the OGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the OGST Act. 2.0 The applicant furnishes some facts relevant to the stated activity: • That the Applicant, a government enterprise, has entered into a works order with M/s Singhal Enterprises for transforming raw limestone / dolomite extracted from its mine in Odisha into finished, marketable products through a series of processing steps: crushing, sizing, screening, and grading. The contract places complete commercial and operational risk on Singhal Enterprises until the delivery of conforming, processed limestone / dolomite. BSLC maintains the right to reject any product not meeting prescribed specifications. Crucially, raw limestone/dolomite has no direct industrial utility until subjected to these processes, substantiating the emergence of a commercially distinct commodity. • That the Applicant humbly submits that Section 2(72) of the CGST Act defines "manu....
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....nghal Enterprises amounts to manufacture. The transformation of raw, unmarketable limestone/ dolomite into sized, graded limestone satisfies the "marketability" and "distinct character" test set by the Supreme Court. Union of India v. Delhi Cloth & General Mills, 1963 AIR 791: The case addressed whether the process of converting raw materials results in a new, marketable product. The Court held that marketability and recognition as a distinct commodity is key to qualifying as manufacture. Risk and economic substance are integral. Singhal Enterprises bears all risks until production of a marketable product; BSLC's role is restricted to final acceptance. • That the Applicant humbly submits that the detailed classification of BSLC's contract with Singhal Enterprises as manufacture under GST is significantly reinforced when examining the implications of risk transfer. When the contractor assumes the entire operational and commercial risk -including rejection by the principal for non-conforming goods-the economic substance shifts from a service to a goods supply, supported by both GST literature and case law precedents. • That the applicant also submits a list ....
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....acture' requires the emergence of a product having a distinct name, character, and use. In the present case, the raw material, i.e., limestone/dolomite, continues to remain the same mineral both before and after the processing activities. The name, chemical composition and inherent characteristics remain unchanged. The operations undertaken - crushing, screening and sizing - result only in physical alteration to existence any chemically or commercially distinct commodity. Accordingly, these processes constitute mere processing for improved form or usability and do not satisfy the 'distinct commodity' test contemplated under Section 2(72) of the CGST/OGST Act, 2017. 2. Section 7(1) of the CGST/OGST Act, 2017 read with Schedule II, classifies a supply based on the actual activity performed, not on the contractual allocation of commercial or operational risk. Shifting risk to the contractor does not alter the nature of the process. For GST purposes, 'manufacture' exists only when a new product with a distinct name, character and use emerges. Hence, contractual terms do not convert the underlying activity into manufacture. 3. In the present case, the ownership of the ....
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....Authority 1[or the National Appellate Authority] to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub-section (1) of section 1002[or of section 101C], in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant; The above provision prescribes Advance Ruling on matter or on questions as specified in Section 97(2) of the Act in relation to the supply of Goods or Services or both being undertaken or proposed to be undertaken by the applicant. Here in the case in hand, the applicant sought Advance Ruling in relation to the service provided by one of their supplier i.e. (M/s. Singhal Enterprises). The above findings was appraised to the applicant during the course of personal hearing wherein the applicant sought time to produce detailed reply encompassing case laws/ judgment etc relating to maintainability of their application. The applicants through their Authorized Representative, Shri Akash Kapoor, Advocate submitted relied upon documents along with written submission to substantiate their position regarding admissibility of the application. The relevant facts enumerated in their addi....
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.... 8. That in Anmol Industries (supra), the Hon'ble High Court further held that rejection of an application for advance ruling solely on the ground that the applicant was a service recipient is contrary to the scheme of the Act, and that an applicant who is a recipient may validly seek clarification on issues such as applicability of exemption notification, rate of tax and classification, as these matters directly affect the applicant's tax obligations and entitlements. 9. That again, in the case of M/s Gayatri Projects Limited & Anr. v. Assistant Commissioner of State Tax, Durgapur Charge & Ors., M.A.T. 2027 of 2022, the Hon'ble High Court at Calcutta reiterated that the term "applicant" under Section 95(c) covers any registered person whose tax position is impacted and that the authorities under the Advance Ruling mechanism cannot confine the locus exclusively to suppliers. The Hon'ble Court emphasized that such a restrictive approach is not borne out by the statutory text. 10. That the aforesaid judgments in Anmol Industries (supra) and Gayatri Projects (supra) authoritatively affirm that a recipient of services has the locus standi to seek an advance ruling an....
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....ssued ruling on merit considering facts and circumstances of the case. As discernible from the above facts, we found that, the issue raised herein in the present application is marked resemblance to facts referred in the above judgment of Hon'ble High Court of Calcutta. At this juncture, We also take cognizance of Judgment of Bombay High Court in case of Commercial of Income-Tax, Vidarbha vs. Smt. Godavari Devi Saraf,(1978) 113 ITR 589, wherein the Court held that until a contrary decision is given by any other competent High Court, it is binding on a Tribunal in the State of Bombay, it has to proceed on the footing that the law declared by the High Court, though of another State, is the final law of land. In that sense, the decision of Gujarat High Court is binding on the authorities below. In view of the above position of law, we proceed to decide the Advance Ruling application on merit. We have carefully examined the submissions made by the applicant and the jurisdictional officer, the documents placed on record, and the statutory provisions applicable to the present case. The core issue for determination is whether the activities of crushing, screening and sizing of limes....
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....ew product having a distinct name, character or use. The activity therefore fails the statutory test laid down under Section 2(72) of the CGST Act, 2017. Further, the applicant has contended that physical transformation of limestone through crushing and sizing should be treated as manufacture. This submission runs contrary to settled law as the Hon'ble Supreme Court in Union of India v. Delhi Cloth & General Mills Co. Ltd. [AIR 1963 SC 791] categorically held that: "Every change is not manufacture; there must be transformation into a new and distinct article." In the present case, there is no transformation into a new article. Only physical dimensions are altered, while the chemical composition, mineral identity and commercial nomenclature remain unchanged. With regards to the applicant's Submission on Contractor Bears Commercial / Operational Risk, we observed that, the contention is irrelevant for GST classification purposes. The CGST Act does not recognize allocation of commercial risk as a criterion for determining manufacture or supply of goods. Section 7 of the CGST Act read with Schedule II mandates classification based on the nature of activity actually....