49th GST Council: Grants exemption on Coal rejects delivered to and received by Washeries
The 49th GST Council has decided to amend entry at Sl. No. 41A of notification No. 1/2017-Compensation Cess (Rate) so that exemption benefit covers both coal rejects supplied to and 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. Coal Rejects are basically a by-product of the coal washing or...
The 49th GST Council has decided to amend entry at Sl. No. 41A of notification No. 1/2017-Compensation Cess (Rate) so that exemption benefit covers both coal rejects supplied to and 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.
Coal Rejects are basically a by-product of the coal washing or coal beneficiation process in which after separation of beneficiated washed coal and Middlings, the rejects are left over as a portion of raw feed coal. These are generated from the coarse circuit of the coal washery process.
The Chhattisgarh Authority for Advance Ruling (AAR) has recently ruled that no GST can be levied on washed/rejected Coal from washery on which Compensation Cess is paid and Input Tax Credit (ITC) not availed.( In Re: M/s Sonal K. Mishra CITATION: 2023 TAXSCAN (AAR) 131).
Currently the exemption has been provided only on rejects supplied by a washery arising out of coal, provided compensation cess has been paid on raw material and no input tax credit thereof has been availed by any person.
Principal users like power companies pay compensation cess on the entire quantity of raw coal purchased and send it to washeries for beneficiation. Washed coal is sent back to the power companies while the coal rejects are sold by the power companies to the washeries.
Representations were received regarding the demand of compensation cess on coal rejects sold by the power companies to the washery. There are cases where, the power companies have been availing credit of compensation cess to discharge the liability on coal rejects supplied to the coal washeries. However, in such a case, the washery is not able to get the benefit of the exemption as the power company has availed input tax credit.
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