Page 148 - GSTL_23rd April 2020_Vol 35_Part 4

474 GST LAW TIMES [ Vol. 35
(b) Any activity or transaction in connection with or incidental or an-
cillary to sub-clause (a)
……………….
………………...
56. Basis the above, it has been argued by the Appellant that coal is an
input used in the manufacture of power, which in turn is used for manufacture
of steel. The Appellant sought to place the emphasison extracts of the Memoran-
dum of Association of JSL, which was placed, before the Appellate Authority
earlier also on 22-6-2018 as a part of the additional submissions to the subject
appeal. The relevant extracts of the same have been reproduced as under :
B. THE OBJECTS INCIDENTAL OR ANCILLARY TO THE
ATTAINMENT OF THE MAIN OBJECTS :
3. To carry on the business of mechanical engineers and to design,
construct, fabricate and manufacture all kinds of machines, tools
and implements, iron and brass founders, metal workers, machin-
ists, iron and steel workers, smiths, metallurgist, producers of electric
energy, appliances : to carry out research and development for any
activity....
(Emphasis supplied)
Vide the above memorandum, they have sought to establish that the generation
of power is one of the business activities of JSL (i.e. the Principal) and coal used
for such business activities would be qualified as input for JSL.
57. The Appellant has further reiterated that its power plant is a captive
power plant of JSL. They also submitted that since generation of power is an in-
tegral part of the business activities of JSL and such power generated at the cap-
tive plant is used for manufacture of steel. The coal required for generation of
power thus qualifies as input for JSL i.e. the Principal in this proposed arrange-
ment.
58. In addition to the above submissions, the Appellant also referred to
Circular No. 79/53/2018-GST, dated 31-12-2018 issued by the Central Board of
Indirect Tax and Customs. Relevant portions of the paragraph 9(b) of the afore-
said circular are reproduced as under :
Issue : A registered person uses coal for the captive generation of electricity
which is further used for the manufacture of goods (say aluminium) which
are exported under Bond/Letter of Undertaking without payment of duty.
Refund claim is filed for accumulated input tax credit of compensation cess
paid on coal. Can the said refund claim be rejected on the ground that coal
is used for the generation of electricity which is an intermediate product
and not the final product which is exported and since electricity is exempt
from GST, the ITC of the tax paid on coal for generation of electricity is not
available?
59. Clarification : There is no distinction between intermediate goods or
services and final goods or services under GST. Inputs have been clearly defined to
include any goods other than capital goods used or intended to be used by a supplier in
the course or furtherance of business. Since coal is an input used in the production of
aluminium, albeit indirectly through the captive generation of electricity, which is di-
rectly connected with the business of the registered person, input tax credit in
relation to the same cannot be denied.
(Emphasis Supplied)
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