Page 146 - GSTL_23rd April 2020_Vol 35_Part 4

472 GST LAW TIMES [ Vol. 35
not the case here, as there is involvement of third entity which is in nature of the
regulatory agency which would govern the supply of the final commodity, in
this case, electricity, subject to certain terms and conditions. Thus, the ‘principal’
does not have control over the commodity processed upon by the ‘job worker’
even after the processing of the inputs, as the ‘principal’ cannot bring back the
inputs on its own and is wholly dependent on this third party, in this case Maha-
rashtra State Electricity Distribution Co. Ltd. (MSEDCL) for getting back the elec-
tricity to its plant. Thus, it is concluded that the entire process of sending the in-
put in the form of coal and receiving back in the form of electricity does not con-
stitute ‘Job work’ due to involvement of the third regulatory party which is be-
yond the control of the ‘principal’ as well as ‘job worker’ and this third party is
not merely a mode of supply of goods between ‘principal’ and ‘job worker’.
Thereby affecting the supply of final goods from ‘job worker’ to the ‘principal’.
Thus, the return of inputs (even in changed form) as envisaged in Section 143(1)
of CGST Act, 2017 is not guaranteed at the hands of the ‘Principal’ due to the in-
volvement of third party in the nature of regulatory body. As mentioned above
the definition of job work, as cited above, covers only two parties i.e. ‘Principal’
and ‘Job worker’ for smooth movement of goods and does not leave any scope of
a third party which can affect the movement of the goods between the ‘Principal’
and the ‘Job worker’.
51. An example has been put forth by JEL that; inputs which are
brought back to the Principal’s premises and are tangible in nature could be
transported through roadways/railways etc. In such a case, the rail authorities
would be a regulator for allocation of rakes/carriages. A fee would be charged
for transportation of inputs, loading, unloading etc. and it would be absurd to
conclude that since the railway authority is a regulator in said example, a Job
Work model cannot be executed by a Principal and a Job Worker utilizing the
services of the railways. Similarly, the amount paid to the Grid was akin to a
transportation charge for goods sent from the Job Worker’s premises.
Here it is pertinent to mention that MSEDCL’s mandate includes distri-
bution of electricity throughout the state by buying power from either Maha-
Genco, Captive Power Plants or from other State Electricity Boards and Private
sector power generation companies.
Railways ferries passengers parcel and freight services of various com-
modities and fuels in industrial, consumer and agricultural segments across the
length and breadth of India. It is not into the business of buying commodities
and fuels in Industrial, consumer and agricultural segments so the similarity
ends at distribution, therefore the comparison between the rail authorities charg-
ing fee for transportation of inputs, were similar to the amount paid to the Grid is
weak. The Transporter or Railways cannot dictate terms, divert or send the con-
signment/to somebody else which MSEDCL can. In the instant case, the manu-
facturer/principal cannot bring back their inputs, which is in the form of electric-
ity, without getting due and prior approval from the competent authority. Hence
inputs proposed to be sent to a Job Worker cannot be brought back and the
transaction undertaken would not fulfil all the conditions mentioned under Sec-
tion 143 of the CGST Act to qualify as a Job Work transaction.
52. JEL have relied on the decision of the Hon’ble High Court of Bom-
bay in the matter of CCE, Aurangabad v. Endurance Technologies Pvt. Ltd. And the
Tribunal at Chennai in the matter of DCW Ltd. v. Commissioner of C.Ex., Triunel-
velr and in the matter of The India Cements Ltd. and Others v. CCE, Salem.
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