Page 168 - GSTL_23rd July 2020_Vol 38_Part 4

534 GST LAW TIMES [ Vol. 38
[Order]. - Proceedings : At the outset, we would like to make it clear that
the provisions of both the CGST Act and the MGST Act are the same except for
certain provisions. Therefore, unless a mention is specifically made to such dis-
similar provisions, a reference to the CGST Act would also mean a reference to
the same provisions under the MGST Act.
The present appeal has been filed under Section 100 of the Central Goods
and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act,
2017 [hereinafter referred to as “the CGST Act and MGST Act”) by Ordnance
Factory Bhandara (hereinafter referred to as the “Appellant”) against the Ad-
vance Ruling No. GST-ARA-79/2018-19/B-168, dated 24-12-2018 [2019 (26)
G.S.T.L. 423 (A.A.R. - GST)].
Brief facts of the case
(A) M/s. Ordnance Factory, Bhandara (hereinafter referred to as ‘Ap-
pellant or OFBa interchangeably) having its corporate head office at,
Jawahar Nagar, Bhandara, Maharashtra-441906 is a unit of Ord-
nance Factories Board (OFB) functioning under the Department of
Defence Production and Supply of Ministry of Defence, Govern-
ment of India. There are 41 Ordnance factories in India in total, each
engaged in different activities like production of finished products
and their parts relating to arms, ammunitions, explosives, military
clothing, etc. Established in the year 1960, the main business of the
Appellant is to manufacture propellants and commercial explosives
for use by sister factories for production of finished products like
arms and ammunitions, which are ultimately supplied to Indian de-
fence and military forces. Thus, the Appellant acts as a feeder facto-
ry for goods such as explosives and propellants for its sister Ord-
nance Factories that use such goods for production of finished
goods. However, some of the manufactured goods are also directly
supplied to depots and units of defence and military forces, as per
requirement. The Appellant also sells a small part of its manufac-
tured goods to state police and private firms. Supplies to Defence
Public Sector companies like Bharat Dynamics Ltd. etc. and defence
laboratories like Defence Research & Development Laboratory are
also there.
(B) The manufacturing process involves procurement of various raw
materials from sister Ordnance factories and private entities. Ma-
jority of the purchase is from private entities. The output is then
transferred to sister Ordnance factories/units of armed forces as per
order. The consideration for transfer is fixed by OFB and is booked
in the financial accounts of our organisation and the adjustment is
done through book transfer. Money consideration is involved only
for a small portion of the produce, where the goods are sold to units
under Ministry of Home Affairs, paramilitary forces like BSF, units
of state police, defence PSU’s and private entities.
(C) The goods are sent in finished condition to proof establishments
(such as PXE Balasore, CPF [tarsi] for testing purpose. Such proof
establishments are located outside the factory premises across the
country and they also function under the Ministry of Defence, Gov-
ernment of India. Such sample goods are destroyed during testing
process. The value of the raw materials used in the supply goods
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