Maharashtra AAAR for GST issued ruling over GST on coal

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The Sajjan Jindal-led company, JSW Steel purchases coal on a bulk basis and pay GST but while passing this benefit to another company , JSW Energy , they argued that they cannot pay another tax. To seek clarity on the matter , they went for advance ruling.

AAAR argues that ,Sajjan Jindal-led companies JSW Steel and JSW Energy are two separate legal entities that had entered into a job work contract. Where the steel arm was to supply coal to the energy company and the resultant electricity is used in the manufacturing of steel.  In this transaction, GST was levied first on JSW Steel and then when the coal is supplied to the energy company there was another GST payment levied on JSW Energy.

Earlier AAAR , during July 2018 , passed an order saying that the contract signed does not constitute as job work contract, thus the GST had to be paid twice. The companies then approached the Bombay High Court and approached the AAAR again on this matter. The Maharashtra GST tribunal bench revised this order and said that the transaction will be considered as job work u/s 143 of central goods and service tax act and GST will be levied on JSW Steel for procuring coal and while paying the job work charges to JSW Energy. 


The Maharashtra Appellate Authority for Advance Ruling (AAAR) for Goods and Service Tax ruled that ,” The proposed arrangement of supply of coal or any other inputs by the principal i.e. JSW Steel to Appellant I.e. JSW Energy for generation of electricity will be construed as job work.
Accordingly, no GST will be leviable on this supply. Finally the job work charges payable to JSW Energy will be subjected to GST in terms of the relevant provisions”.

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