Page 151 - GSTL_23rd April 2020_Vol 35_Part 4

2020 ] IN RE : JSW ENERGY LIMITED 477
In this regard, the Appellant has furnished the certificate of the Cost Ac-
countant pertaining to F.Y. 2017-18, wherein it has been testified that coal and
other inputs constitutes a major cost i.e. more than 95% of the total cost of mate-
rials that are required for generation of power, whereas the cost towards water
and air does not exceed 0.5% of the cost of inputs. Referring to this certificate is-
sued by the Cost Accountant, the Appellant have further contended that coal
constitutes the major cost for manufacture of power, whereas air and water con-
stitute a very negligible cost. Accordingly, as per the principle laid down in the
case of Prestige Engineering (India) Limited (supra) additions of minor materials by
the Job Worker (such as air and water) would not alter the nature and character
of the underlying transaction. It would still be considered as a job work transac-
tion.
67. Now, in view of the above submissions and the certificates issued
by the Cost Accountant, it is opined that the Appellant is squarely satisfying the
stipulations laid down by the Apex Court in the case of Prestige Engineering (In-
dia) Ltd. (supra). Hence, we are inclined to repeal our earlier observations in this
regard. Furthermore, it is reasonably concluded that addition of the air and wa-
ter by the Appellant to the coal proposed to be supplied by JSL will not detract
the proposed transaction from being qualified as Job work.
68. We had expressed our reservation in respect of the presence of, and
dependency on the third party regulator i.e. MSEDCL during the transmission
of the electricity generated in the proposed job worker’s premises i.e. JEL after
processing of the coal sent by JSL, the proposed principal will detract the pro-
posed arrangement from being the Job work, because the bringing back of inputs
sent by JSL to the premises of the proposed job worker after the same has been
processed to generate electricity is not guaranteed because of the presence of this
third party regulator i.e. MSEDCL, which is the competent body to grant any
transmission and distribution related permissions, and formulate any guidelines,
which are needed to be adhered by the entities using the transmissions and dis-
tribution facility of MSEDCL. Thus, we had opined that the principal will not be
in position to independently bring back the inputs from the premises of the job
worker, thereby not satisfying the conditions laid out in Section 143(1)(a) of the
CGST Act, 2017.
69. With regard to the above observation made in the impugned AAAR
order dated 2-7-2018, the Appellant has contended that there is no bar on the in-
volvement of the third person in the transportation of the inputs from the princi-
pal to the job worker, and from the job worker to the principal. They elaborated
this with one illustration, wherein some tangible goods are sought to transported
between the premises of the principal and that of job worker by availing the facil-
ity of railway. In this case, the railways will be acting in the capacity of the regu-
latory authority for the purpose of the transportation of the said goods, as they
will be allocating the rakes and carriages for the subject goods, similar to the
power regulator in the case of the transmission of electricity from one place to
another. They further contended that transportation of the goods between the
principal and the job worker by the railways/roadways has never been disputed
in the context of the fulfilment of the condition prescribed for the job work trans-
action/activity.

GST LAW TIMES  23rd April 2020  271