18% GST on Coal Handling and Distributor Charges whenever Supply is made to Consumers: AAR

The Authority of Advance Ruling (AAR) Madhya Pradesh ruled that 18% of GST on coal handling and distributor charges whenever the supply of such service is intended to be made expressly to the consumers.

The applicant, M/s Agarwal Coal Corporation Private Limited is engaged in the business of trading of coal in India and for the same Applicant undertakes purchase of coal from domestic markets as well as imports from overseas.

On purchase of coal, the Applicant has submitted that 5% of GST is paid in an intra-state and inter-state supply as the case may be, and on import of coal from the overseas market  5% of IGST is paid. After coal is imported the coal is stockpiled at the port itself at the designated place for subsequent sale to customers. Various services are availed by Applicant at the port during the process of procurement of coal and for fulfilling obligations towards the supply of coal.

The applicant has sought the advance ruling on the issue whether Whether the Applicant is liable to discharge tax liability at the rate of 18% on coal handling and distribution charges wherever the supply of such services is intended to be made expressly to a customer or will the Applicant be entitled to charge GST at the rate of 5% as applicable on supply of coal and will the applicant be entitled to utilize the input tax credit availed for discharging liability towards the supply of coal and supply of coal handling and distribution charges.

The Authority consisting of its members Manoj Kumar Chobey and Virendra Kumar Jain ruled that the coal handling and distribution charges will be taxed at the rate of 18% and not 5% wherever the supply of such services only is intended to be expressly made to a customer.

“In light of the referred provisions we are of the opinion that input credit availed as per the conditions specified in section 16 shall be allowed for discharging the liability towards the supply of coal and supply of coal handling and distribution charges respectively,” the Authority said.