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2022 (10) TMI 909 - AAR - GSTTaxability - coal rejects whose invoice is raised by Applicant upon washery/job-workerInput Tax Credit (ITC) of GST and Compensation Cess of raw coal brought from its supplier and transferred to washery/job worker for cleaning - admissible proportion of Input Tax Credit. Whether the “coal reject” whose invoice is raised by Applicant upon washery job-worker, is taxable under GST Act and Compensation Act in the hands of Applicant? - HELD THAT:- The coal rejects generated during the process of Coal washing are nothing but Coal with higher percentage of Ash content. HSN 2701 covers “Coal; briquettes, avoids and similar solid fuels manufactured from coal”. Therefore. Coal rejects are rightly classifiable under HSN 2701 and as per Notification No. 01/2017- Central Tax (Rate) dated 28.06.2017. 2.5% Central GST is also leviable for the same heading i.e. 2701 under schedule-I, further, as per Notification No. 01/2017- compensation cess (Rate) dated 28.06.2017. Rs. 400 per tonne is leviable as compensation cess under Chapter Heading Sub-heading 2701 - Coal rejects are to be classified under HSN 2701 and are taxable at 5% GS T Rate + Rs. 400 PMT Compensation Cess. Whether Applicant is eligible to avail Input tax Credit of GST and Compensation Cess of raw coal brought from its supplier and transferred to washery job worker for cleaning? - HELD THAT:- Where the goods are being received in lots or installments. the registered person shall be entitled to take credit upon receipt of the last lot or installment. Thus, if the applicant fulfils the eligibility conditions as prescribed under Section 16 of CGST Act, 2017 & PGST Act, 2017 and if the type of ITC do not fall under the categories prescribed under Section 17 of CGST Act, 2017 & PGST Act, 2017. the applicant is eligible to avail Input Tax Credit of GST and Compensation Cess of raw coal brought from its supplier and transferred to washery/job worker for cleaning. Further, the “principal” shall be entitled to avail ITC in relation to goods sent directly to the premises of job-worker. If the answer to above question is yes and ITC is admissible, what is the admissible proportion of Input Tax Credit? - HELD THAT:- The formula prescribed under Rule 42 of CGST & PGST Rules, 2017 for manner of determination of input tax credit in respect of inputs or input services and reversal thereof will be applicable in both cases i.e. GST and Compensation Cess. Therefore, the provisions prescribed under Rule 42 of CGST & PGST Rules, 2017 should be followed by the applicant and they have to make reversal in the proportion of exempt/taxable turnover.
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