The Chattisgarh Bench of Authority of Advance Ruling (AAR) has recently ruled that nil liability of gst from compensation cess is not applicable to coal rejects supplied by power plants.
The Authority Bench of Members Sonal K Mishra and Rajesh Kumar Singh has observed that the GST Notification No. 02/2018-Compensation Cess (Rate) dated 26/07/2018 extending nil liability of compensation cess on coal rejects supplied by a coal washery, will not be applicable to coal rejects supplied by a power plant and further such power plant supplying coal rejects to the applicant is liable to collect compensation cess.
The applicant M/s Akaltara Minerals, represented by Ankit Gupta, CA and Ashutosh Shrivastava, CA appeared filed an application under Section 97 of the Chhattisgarh Goods & Service Tax Act, 2017 requesting an advance ruling on applicability of CST Notification No. 02/2018- Compensation Cess (Rate) dated 26h7/2018 on sale of coal rejects by a power plant of Chhattisgarh State Power Generation Company Limited (CSPGCL) to the applicant.
The applicant also seeked a response as to whether the said Power Plant selling coal rejects is liable to collect compensation cess even though the applicant does not get Input Tax Credit (ITC) on coal, resulting in an increased cost of coal waste.
The Authority Bench observed that, “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. In the applicant’s case, it receives coal rejects from the power plant and not from the coal washery.“
It was thus ruled that, “GST Notification No. 02/2018-Compensation Cess (Rate) dated 26/07/2018, extending nil liability of compensation cess on coal rejects supplied by a coal was hery, will not be applicable to coal rejects supplied by a power plant and further such power plant supplying coal rejects to the applicant is liable to collect compensation cess.”
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