2018 (5) TMI 763 – AUTHORITY FOR ADVANCE RULINGS MAHARASHTRA – 2018 (13) G. S. T. L. 92 (A. A. R. – GST) – Applicability of GST on supply of power – GST on Supply of coal or any other inputs on a job work basis by JSL to JEL – GST on Job work charges payable to JEL by JSL. – In terms of the proposed arrangement, JSL would supply coal or any other inputs (herein after collectively referred to as 'inputs') to the Applicant on a free-of-cost basis. On receipt of the same, JEL would undertake certain processes to convert the said inputs into power. In accordance with the Job Work Agreement, the title to the coal or any other inputs along with the power generated from the said inputs will vest with JSL.
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Held that: – the inputs provided by JSL to JEL are coal or any other inputs and after processing these, the output is electricity which is supplied to JSL. As an immediate observation, the goods sent for job work are coal and after the so claimed process of 'job work' by JEL, the new
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ot to cover such treatment or process as would result into a distinct commodity. The activity, in fact, is a manufacture of electricity.
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In the instant case the end product i.e., “electricity” has a distinct name, character and use than the inputs i.e., “coal”. Thus, when the Legislature has provided for the definition of 'job work' as well as 'manufacture', the meaning as understood by the definition of 'manufacture' cannot be read into the words 'treatment or process' as found in the definition of 'job work'. 'Treatment', *Process' and 'Manufacture' are three different activities recognized by the Legislature. The intent of the Legislature is to restrict the scope of 'job work' to 'treatment' or 'process' and not to extend the same to 'manufacture'.
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The activity undertaken by JEL amounts to manufacture of electricity from the coal as supplied by JSL and is squarely covered in the definition of manufacture' under the GST Act. It is, therefore, not covered by the scope of
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and MGST Act ] by Ms. JSW Energy Limited, the applicant, seeking an advance ruling in respect of the applicability of GST on: 1. Supply of coal or any other inputs on a job work basis by JSL to JEL 2. Supply of power by JEL to JSL 3. Job work charges payable to JEL by JSL 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 dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act/MGST Act would be mentioned as being under the GST Act . 02. FACTS AND CONTENTION – AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- ANNEXURE 1 – STATEMENT OF THE RELEVANT FACTS HAVING A BEARING ON THE QUESTION(S) ON WHICH THE ADVAN
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ld undertake certain processes to convert the said inputs into power. In accordance with the Job Work Agreement, the title to the coal or any other inputs along with the power generated from the said inputs will vest with JSL. 4. The mechanics of the transaction and consideration payable by JSL to the Applicant for the generation and supply of power has been diagrammatically illustrated. 5. The above be further explained as under: a. JSL imports coal from suppliers located outside India b. Required inputs (such as coal) would be supplied by JSL to JEL- For the purpose of this arrangement, JSL shall be construed as a 'Principal'. On receiving the inputs, JEL shall undertake the activities in accordance with the Job Work Agreement c. Power generated from the aforesaid activities shall be supplied back to the Principal d. JEL would recover charges from JSL in accordance with the Job Work Agreement. Each invoice shall contain details of the inputs supplied to JEL and power supplied
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tion of law and its applicability to the proposed activity by the Applicant, discussed hereunder. 2. POSITION OF LAW PROVISIONS REGARDING 'JOB WORK' UNDER THE GST REGIME 2.1 The term 'Job Work' is defined under Section 2(68) of the CGST Act, 2017 as under: (68) Job work means any treatment or process undertaken by g person on goods belonging to another registered person and the expression Job Worker shall he constructed accordingly, 2.2. On perusal of the aforementioned definition, it can be observed that all of the following three conditions need to be fulfilled to classify an activity as a Job Work, viz: (i) Treatment or process should be undertaken by a person; (ii) Such treatment or process should be on goods; and (iii) These goods should belong to another registered person 2.3 To summarize the above, under the GST Regime, a Job Worker shall undertake a treatment or process on the goods (i.e. inputs) -belonging to another person for the transaction to fall within th
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apital goods, other than moulds and dies, Jigs and fixture, or tools, within one year and three years, respectively, of their being sent out, to any of his place of business, without payment of tax; (b) […..] (2) [….](5) Explanation. For the purposes of job work input includes intermediate goods arising from any treatment or process carried out on the inputs by the principal or the Job worker. PROVISIONS REGARDING 'SERVICES OF TREATMENT OR PROCESS IS APPLIED TO ANOTHER PERSON'S GOODS' UNDER THE GST REGIME 2.5. The term 'supply' has been defined under Section 7 of the CGST Act and covers supply of goods as well as services. The said definition also seeks reference to Schedule II wherein specified supplies have been classified either as a good or a service. Entry 3 of the said provides that 'Any which is applied to another person's goods is supply of services . Accordingly, the said activity would be construed as a service. 2.6. The Applicant als
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directly or indirectly control a third person: or they are members of the same family; JSL and JEL would be treated as related persons on account of direct or indirect control over each other. 2.8. On account of JSL and JEL being related person, valuation of supply of goods or services or both would be determined under the prescribed rules. For said purpose the Government vide Chapter IV of CGST Rules, 2017 ('the CGST Rules') has laid down the procedure for determining the valuation of the goods/services or both. 2.9. Rule 28 of the said rules prescribe that the value of supply of goods and services or both, where the supplier and recipient are related, shall be- • the open market value of such supply • if the open market value is not available, the value of supply of goods or services of like kind and quality 2.10. Further the proviso to above referred rule provides that where the recipient is eligible for full input tax credit, the value declared in the invoice sha
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. Power – Power shall mean electrical output generated in MW terms. Product- Product includes power – in addition to the fly ash and other resultant products generated at Power Plant through the Job Work Services. 3.2. Supply of Inputs On and from the Effective Date, JSL appoints JEL, on a Job-Work basis to carry out the treatments and processes comprising the Job-Work Services on supply by JSL of the Inputs (free of charge) On occurrence of the above, JEL shall provide the Job Work Services in accordance with the terms hereof. The Parties agree that JEL shall not be able to perform the Job Work Services (which obligations are contingent upon supply of the Inputs) under the Agreement unless the Power Plant receives uninterrupted availability/accessibility, as applicable, of/to the Inputs in accordance with the Agreement. 3.3. Restriction on Sale of Inputs JEL agrees that it shall use the Inputs supplied by JSL hereunder solely for the purposes of providing the Joh Work Services and sha
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ually agreed volume to weight conversion basis. JEL at its expense, shall procure, install, own and maintain two sets of Metering System separately for each transformer as per regulations of Central Electricity Authority. The energy meter and associated equipment shall be of 0.2s accuracy class. These meters shall function as main meters and check meters. The general location of these meters shall be the metering point. Such equipment shall be capable of providing instantaneous output measurements to measure electrical output delivered at a specific time. 3.7 Records Supply of Inputs, including delivery challans documenting the movement of goods, and provision of Job work Services shall be evidenced by documentary proof, mutually agreed by the parties m accordance with the Applicable Law at the end of the [Month] a jointly signed report showing the challan – wise quantity delivered by JSL, shalI be prepared. 3.8 Additional Covenants, Roles and Responsibilities JEL, shall (i) provide th
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by a person to be termed as a 'Job Work', the said treatment or process should be undertaken on the goods belonging to another person. Therefore, there are three essential requirements to be fulfilled by the Company in the present case to term the present transaction as 'Job Work', namely: a) The activity undertaken by the Applicant should qualify as a 'treatment or process', b) The treatment or process undertaken should be on goods i.e. the inputs (coal) involved in the present case should fall within the ambit of term 'goods' c) These inputs/goods should belong to JSL d) Inputs should be brought back after completion of Job Work or Otherwise, within one year of their being sent out, to any place of business of the Principal. Fulfillment Of the conditions mentioned above are explained hereunder: ACTIVITY UNDER TAKEN BY COMPANY AMOUNTS TO 'TREATMENT OR PROCESS' 4.3. In terms of the first condition, the activities undertaken by the Applicant shou
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e products would fall the scope of these expression, and would amount to the Job Work • S.B. Sarkar's Word & Phrases of Excise, Customs & Service tax. 4th Edition: Process means Prepared, handled, treated or produced by a special process [] • Websters Dictionary: processing means to the subject to some special process or treatment; to subject (esp. raw material) to a process of manufacture, development or preparation []. 4.4. Considering the above, it can be submitted that the activity of generation of power undertaken by the Applicant amounts to a 'process' and accordingly, the Applicant is undertaking a process in the present case on the goods. Therefore, condition (a) mentioned above in paragraph 4.2 is fulfilled in the present case. INPUTS SHOULD FALL WITHIN THE AMBIT OF THE 'GOODS' AS DEFINED IN THE CGST 4.5. In terms of the second condition, the inputs on which the treatment/ process is undertaken by the Applicant should qualify as 'goods
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wer. Reference is also sought to the agreement between JEL and JSL, the relevant clauses of which have been set out at paragraph 3 hereinabove. Upon perusal of the said clauses, the following emerge as the key features of the contractual and commercial arrangement between the parties: • JSL is to provide coal or any other inputs on free-of-cost basis to JEL, and the ownership of coal or any other inputs will remain with JSL at all times; • JSL shall be the sole and absolute owner of the power generated by JEL; • JEL cannot in any manner deal with the power that is generated from the processing which is carried out by utilizing the inputs provided by JSL, and the mere fact that JEL processes the coal provided by JSL for generation of power does not give JEL any rights whatsoever over the power so generated; 4.8. In terms of the proposed arrangement between the parties, JSL is required to provide coal for generation of power by JEL. The said inputs are processed by JEL for
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rocess at the hands of the Job Worker may rob the notification of any substance whatsoever . The above principle was relied on by the CESTAT, New Delhi in the matter of Haldia Petrochemicals Ltd vs Commissioner of C.Ex. [2004 (177) ELT 708 (Tri-Delhi)], = 2004 (9) TMI 464 – CESTAT, NEW DELHI wherein the appellant supplied raw materials to their Job Worker who was a power plant. In the said context, it was held that; Having regard to the fact that inputs for generation of power or steam are specifically mentioned in the definition of input . we are of the view that the Cenvat credit is available even if the identity of the input is lost when the Job Worker returns the goods after further processing……. Based on the above, it can be construed that barter of inputs was also an acceptable form of receiving the inputs sent by the Principal. 4.1 1. Reference can also be cited to the decision of the Hon'ble High Court of Bombay in the matter of CCE, Aurangabad vs. Endurance T
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tax on such input held that there should not be inadmissibility of input credit on input or input services used by wind mills to generate energy which is made available through power board under barter system. In the judgment of Endurance Technologies, the High Court has concluded that input tax credit of the inputs used in generation of power under barter transaction, where the power is supplied back against the inputs, would be available. On basis of the above mentioned judgments it can be construed that transaction of processing the coal supplied by JSL and supplying back the power generated to JSL would fulfill the condition of bringing back the inputs. 4.12. As all the conditions mentioned under paragraph 4.2 required to be fulfilled by the Applicant in order to fall under the ambit of the term 'Job Work', are satisfied, the present transaction would be construed as a Job Work transaction and the Applicant would be considered as a Job Worker of JSL. CLASSIFICATION OF JOB
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generator, a machine that turns mechanical energy into electric energy. This happens when magnets inside a copper coil in the generator spin. • A condenser cools the steam moving through the turbine. As the steam is condensed, it turns back into water. The water returns to the boiler, and the cycle begins again. On the basis of the above, the processes undertaken on JSL's coal by JEL would amount to supplying a service and subjected to tax under the GST regime. APPLICABILITY OF CIST ON THE PRESENT TRANSACTION 4.15 On establishing a job work arrangement between JSL and JEL as per above, the applicability of GST on the subject transaction also needs to be examined. For the said purpose, reference is sought to Section 143(1) of the CGST Act which allows movement of inputs or capital goods without payment of tax, to a job worker for job work activities. Accordingly, it is humbly submitted that movement of coal or any other inputs from JSL to JEL would not be subjected to tax on ac
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ce is sought to Rule 28 of the CGST Rules mentioned under paragraphs 2.9 and 2.10 of this application, which pertains to valuation of supplies between related persons. As per the said rules, the value of supply of services would be the open market value of such supply. This term has been explained to mean the full value in money, excluding the integrated tax, central tax, State tax, Union territory tax and the cess payable by a person in a transaction, where the supplier and the recipient of the supply are not related and the price is the sole consideration, to obtain such supply at the same time when the supply being valued is made. Accordingly, it is submitted that GST would be applicable on the job work charges levied by JEL to JSL. SUBMISSION DT. 16.02.2018 1. MEANING AND DEFINITIONS 1.1. At the outset, we would like to refer to the definition of 'job work' as defined under Section 2(68) of the CGST Act. The said definition is reproduced as follows: Job work means any or pr
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Rajasthan State Chemicals Works – 1991 (55) E.LT. 444 (SC), = 1991 (9) TMI 73 – SUPREME COURT OF INDIA the Supreme Court examined the ambit of the term 'process'. Relevant extract of the judgement has been reproduced as follows: The natural meaning of the word 'process' is a mode of treatment of certain materials in order to produce a good result, a species of activity performed on the subject-matter in order transform or reduce it to a certain stage. According to Oxford Dictionary one of the meanings of the word process' is a continuous and regular action or succession of actions taking place or carried on in a definite manner and leading to the accomplishment of some result. The activity contemplated by the definition s perfectly general requiring only the continuous or quick succession. It is not one of the requisites that the activity should Involve some operation on some material in order to conversion to some particular stage. There is nothing in the natural
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y the Principal (i.e. JSW Steel Ltd) to the Company for the purpose of carrying out the specified processes for generation of electricity which is supplied back to the owner of the coal, including the by-product i.e. fly ash. Thus, the Company humbly submits that the pre-requisites i.e. carrying out a treatment or process on goods belonging to another would qualify the proposed transaction under the ambit of a job work. 2. DEPARTMENTL FREQUENTLY ASKED QUESTION (FAQ) 2.1 Without prejudice to the above, the Company humbly submits that the definition of the term job work' as defined under the GST legislation has a wider meaning than the one, as existed under the pre-GST regime- This has also been clarified in the FAQ issued by the Central Board of Excise and Customs – New Delhi which is reproduced as follows: Q1. What is job work? Ans. Job work means undertaking any treatment or process by a person on goods belonging another registered taxable person. The person who is treating or pro
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and accordingly the same should not be interpreted in a restrictive manner under the GST legislation. 3. PROVISIONS APPLICABLE TO JOB WORKER UNDER THE GST REGIME 3.1. The Company seeks reference to Section 7 of the CGST Act which defines the ambit of the term 'supply'. The said Section also seeks reference to Schedule I wherein supplies of goods or services or both between related persons or between distinct persons made in the course or furtherance of business without consideration would be deemed to be a supply. 3.2. In light of the above inclusion, the Company also refers to Section 143 of the CGST Act wherein for the purpose of job work, a Principal may send inputs or capital goods without payment of tax to a job worker, subject to fulfilment of certain prescribed conditions, without any transfer of ownership permanent or temporary, defacto or dejure. 3.3. Based on a harmonious reading of Section 7 and Section 143 of the CGST Act and reiterating what was stated during the
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mited vs CCE, Rajkot [2014 (302) ELT 564 (Tri.-Ahmd.)] = 2014 (2) TMI 278 – CESTAT AHMEDABAD A copy of the aforesaid cases were submitted at the time of the personal hearing held on 15.02.2018. 4.2. The above judgements cover instances where materials (such as naphtha, light diesel oil, furnace oil, etc) were supplied to the job worker for carrying out a specified process for the purpose of generation of electricity. Nowhere have the Courts denied or held that the activities undertaken do not result into a job work activity. Further the Supreme Court dismissed the appeal petition filed by the Commissioner of Central Excise Nagpur against the order of the Hon'ble Bombay High Court in the matter of Indorama Textiles Ltd (supra) – Commissioner vs Indorama Textiles Ltd. 2010(260) E.LT. A83(SC). = 2010 (7) TMI 981 – SUPREME COURT In light of the aforesaid submissions and the submissions made earlier, it is submitted that the transaction proposed to be undertaken by the Company would be
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the job work procedure. Job work procedure. 143. (1) A registered person (hereafter in this section referred to as the principal ) may under intimation and subject to such conditions as may be prescribed, send any inputs or capital goods, without payment of tax, to a job worker for job work and from there subsequently send to another job worker and likewise, and shall,- (a) bring back inputs, after completion of job work or otherwise, or capital goods, other than moulds and dies, jigs and fixtures, or tools, within one year and three years, respectively, of their being sent out, to any of his place of business, without payment of tax; (b) supply such inputs, after completion of job work or otherwise, or capital goods, other than moulds and dies, jigs and fixtures, or tools, within one year and three years, respectively, of their being sent out from the place of business of a job worker on payment of tax within India, or with or without payment of tax for export, as the case may be: Pro
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job worker on the day when the said inputs were sent out. (4) Where the capital goods, other than moulds and dies, jigs and fixtures, or tools, sent for job work are not received back by the principal in accordance with the provisions of clause (a) of sub-section (1) or are not supplied from the place of business of the job worker in accordance with the provisions of clause (b) of sub-section (1) within a period of three years of their being sent out, it shall be deemed that such capital goods had been supplied by the principal to the job worker on the day when the said capital goods were sent out. (5) Notwithstanding anything contained in sub-sections (1) and (2), any waste and scrap generated during the job work may be supplied by the job worker directly from his place of business on payment of tax, if such job worker is registered, or by the principal, if the job worker is not registered. Explanation.-For the purposes of job work, input includes intermediate goods arising from any t
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68) of CGST Act, 2017 and the procedure in Section 143(a) of the CGST Act, 2017 should be read in conjunction while coming to a conclusion about whether an activity is a job work or not. The real question to be decided in the instant matter is that whether combustion of subject goods 'coal' for generation of electricity would amount to 'treatment or processing' of coal. The answer is negative because the subject goods 'coal' being in the nature of tangible goods are used in this case for combustion in the boiler to convert water in to steam. The generated steam is in turn is supplied to the turbine to generate electricity. And the goods 'electricity' is intended to be supplied to JSL in lieu of coal. This itself means that the inputs supplied by the principal are not subjected to any 'treatment or process' but they are used/consumed to generate/manufacture 'electricity'. As such the processed/treated upon goods are not returned to the pri
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of the term 'job work'. It is more than job work. This office is of the view that the act of sending tangible goods 'coal' to be consumed in the manufacture intangible goods 'electricity' is beyond the scope of term 'job work' as per GST Law. Therefore supply of Coal or any other input would not amount to supply on a job work basis and applicable GST would apply. The rest of the question put forth for decision by JEL may be decided accordingly. 04. HEARING The case was taken up for hearing on dt.30.01.2018 and on dt.15.02.2018 when Sh. Rohit Jain (Advocate) attended alongwith Ms. Hirva Shah, DGM and reiterated the contention as made in the written submission. Written submission was tendered during hearing and a request was made to make a further submission. The same has been tendered. Sh. M. V. Kulkarni, Superintendent attended on behalf of the concerned officer from the Central Tax Office and furnished a written submission. 05. OBSERVATION We have gone
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eement, the title to the coal or any other inputs along with the power generated from the said inputs will vest with JSL. The above can be further explained as under : a. JSL imports coal from suppliers located outside India. b. Required inputs (such as coal) would be supplied by JSL to JEL. For the purpose of this arrangement, JSL shall be treated as a 'Principal'. On receiving the inputs, JEL shall undertake the activities in accordance with the Job Work Agreement. c. Power generated from the aforesaid activities shall be supplied back to the Principal. d. JEL would recover charges from JSL in accordance with the Job Work Agreement. Each invoice shall contain details of the inputs supplied to JEL and power supplied to JSL and the charges for services rendered during the preceding month, applicable taxes and the date of payment for the said consideration. In the aforesaid background, we are called upon to determine the applicability of GST on: 1. Supply of coal or any other in
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aring, the applicant has also acceded to this question not being entertained by the Advance Ruling Authority in view of the supply being by JSL and not by JEL, the applicant. We therefore restrict these proceedings to question nos.2 and 3 and move on to decide the same. SUPPLY OF POWER BY JEL TO JSL There is a supply of power by JEL to JSL. JEL has stated that JSL and JEL are related persons. A study of the application reveals that the applicant has submitted that – i. Movement of coal or any other inputs from JSL to JEL would not be subjected to tax on account of movement of inputs for job work activities. ii. GST would be applicable on the job work charges levied by JEL to JSL. We are not concerned with (i) above as it is not a supply by JEL. As regards (ii) about supply of electricity by JEL to JSL, we will have to examine the correct position after analysis of GST provisions that will be applicable in the context of the present case. As we begin to analyse, we see that the inputs p
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pplication of a treatment or process to the goods. Treatment or process in this definition would mean some processes on the goods but would definitely not mean a complete transformation of the input goods into a new commodity. For this proposition, we draw support from the decision of the Hon. Supreme Court in Manganese Ore India Ltd. v. State of M.P., (2017) 1 SCC 81 : 2016 SCC OnLine SC 1280 = 2016 (11) TMI 543 – SUPREME COURT which has very lucidly explained the meaning of the term 'treatment and processing'. 20. We are absolutely conscious that noscitur a sociis rule is not applied when the language is clear and there is no ambiguity, which according to us does exist and is perceptible in the Explanation in question. A very broad and a wide definition of the term processing if applied, would include manufacture of a new or distinct product. Manufacture normally involves a series of processes either by hand or machine. If a restricted construction is not applied it would cre
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its meaning in the cognate sense. In other words, the general word processing will be restricted to the sense conveyed by the words crushing , treating and transporting . The intent being that electricity tariff payable in respect of mining activities would include the mine itself all machinery situated or located in the mine or in a premises adjacent the to mine wherein crushing, processing, treatment or transportation of the minerals as mined is undertaken. The word processing herein would mean those processes with the help of hands or machineries connected and linked to mining activity. It would not include process by which a new or different article other than the one which has been mined, is produced. It relates and signifies the composite activity of mining and processing. The intent is not to include processes which would lead to creation of a different commodity as known in the commercial world for otherwise even manufacturing activity would get covered, whereas manufacturing u
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the word mineral at the end of the Explanation. The word mineral in the Explanation is the product which was mined and is put to *'crushing , processing , treatment and 'transporting the mineral. In other words, mineral means mineral which Mus mined and not a new product created by using or processing the mineral mined. Applying the ratio in the above case, we see that the definition of 'job work' in the GST Act uses the words 'treatment or process'. The impugned activity undertaken by the applicant to convert the coal into electricity would not be covered by the words 'treatment or process' as found in the definition of job work'. Here, the intent of the legislation is not to cover such treatment or process as would result into a distinct commodity. The activity, in fact, is a manufacture of electricity. And we find that the activity of 'manufacture' has been defined in the GST Act which is as follows: (72) manufacture means processing of ra
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d the same to 'manufacture'. We need not deliberate more on the issue as the emergence of a distinct commodity is very obvious and therefore beyond the applicability of the definition of 'job work' under the GST Act. Here, we would like to say that the applicant has placed much reliance on certain case laws under the Central Excise Act which have been reproduced above. However, the case laws deal with the provisions as were available under the said Act. Such are not the facts in the instant case. We find that these case laws relied upon by the applicant were in the context of eligibility of input tax credit vis-a-vis the definition of input. For the sake of better understanding, we would like to reproduce one such definition which was in consideration in the case of Haldia Petrochemicals Ltd. vs CCE, Haldia [2006 (197) ELT 97 (Tri.- Delhi)] – = 2005 (1) TMI 306 – CESTAT, NEW DELHI input means all goods, except high speed diesel oil and motor spirit, commonly known as pe
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that the activity undertaken by JEL amounts to manufacture of electricity from the coal as supplied by JSL and is squarely covered in the definition of manufacture' under the GST Act. It is, therefore, not covered by the scope of the definition of 'job work' under the GST Act as contended by the applicant. We now invite attention to Section 7 of the GST Act which explains the scope of supply'; 7. (1) For the purposes of this Act, the expression supply includes- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (b) import of services for a consideration whether or not in the course or furtherance of business; (c) the activities specified in Schedule I, made or agreed to be made without a consideration; and (d) the activities to be treated as supply of goods or supply of services as referred to
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ovisions in sub-section (1). Now we see that clause (c) of sub-section (1) refers to activities specified in Schedule I. It is further specified that these activities of Schedule I may be made or agreed to be made without a consideration. So we shall have a look at the Schedule I thus – SCHEDULE I [See Section 7] ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT CONSIDERATION 1. Permanent transfer or disposal of business assets where input tax credit has been availed on such assets. 2. Supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business: Provided that gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both. 3. Supply of goods- (a) by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal; or (b) by an agent to his princ
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controls the other; (vi) both of them are directly or indirectly controlled by a third person; (vii) together they directly or indirectly control a third person; or (viii) they are members of the same family; As can be seen the applicant has informed that in terms of sub-clause (v) of clause (a) of the Explanation to section 15, JSL and JEL are related persons on account of direct or indirect control over each other. In view thereof, in terms of para 2 of Schedule I, the supply of goods or services or both between JSL and JEL would be treated as supply even if made without consideration. Therefore, the supply of power by JEL to JSL would be a transaction of 'supply' And GST would be applicable on this supply. We would now look at the third question – JOB WORK CHARGES PAYABLE TO JEL BY JSL As already discussed above, the transaction between JEL and ISL is a transaction of supply of goods and not a 'job work'. And hence, the question does not survive. In view of all above
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