Case Note & Summary
The petitioner, JSW Energy Limited (JEL), engaged in generation and sale of electricity, proposed an arrangement with JSW Steel Limited (JSL) involving conversion of coal and other inputs into electricity and conversion of electricity into steel on a job work basis. To ascertain whether this arrangement qualifies as 'job work' under Section 2(68) of the Central Goods and Services Tax Act, 2017 (CGST Act) and whether it is entitled to benefits under the CGST and Maharashtra Goods and Services Tax Act, 2017 (MGST Act), JEL applied to the Maharashtra Authority for Advance Ruling for Goods and Service Tax (Advance Ruling Authority) on 7 December 2017. The Advance Ruling Authority, by order dated 5 March 2018, held that the proposed arrangement does not qualify as 'job work' as the process results in a different commodity and not the same goods being returned to the principal. The petitioner appealed to the Maharashtra Appellate Authority for Advance Ruling for Goods and Service Tax (Appellate Authority), which by order dated 2 July 2018, upheld the ruling. Aggrieved, JEL filed a writ petition before the Bombay High Court challenging both orders. The High Court, after hearing the parties, held that the definition of 'job work' under Section 2(68) of the CGST Act requires that the process results in the same goods being returned to the principal. Since the conversion of coal into electricity and electricity into steel changes the identity of the goods, the arrangement does not qualify as job work. The court further held that the Advance Ruling Authority and Appellate Authority had correctly applied the law and there was no perversity in their findings. The writ petition was dismissed, and the impugned orders were upheld.
Headnote
A) Goods and Services Tax - Job Work - Definition under Section 2(68) of CGST Act, 2017 - The proposed arrangement involving conversion of coal into electricity and electricity into steel does not qualify as 'job work' as the process results in a different commodity and not the same goods being returned to the principal. The Advance Ruling Authority and Appellate Authority correctly held that the arrangement is not job work. (Paras 1-19) B) Goods and Services Tax - Advance Ruling - Scope of Judicial Review - The High Court, in writ jurisdiction, does not reappreciate evidence or substitute its view unless the ruling is perverse or contrary to law. The impugned orders were based on proper application of law and facts. (Paras 1-19)
Issue of Consideration
Whether the proposed arrangement between JSW Energy Limited and JSW Steel Limited for conversion of coal into electricity and electricity into steel on job work basis qualifies as 'job work' under Section 2(68) of the Central Goods and Services Tax Act, 2017 and whether the petitioner is entitled to benefits under the CGST and MGST Acts.
Final Decision
The writ petition is dismissed. The impugned orders dated 5 March 2018 and 2 July 2018 are upheld. No order as to costs.
Law Points
- Job work definition under Section 2(68) of CGST Act
- 2017 requires that the process results in the same goods being returned to the principal
- conversion of coal into electricity and electricity into steel changes the identity of goods
- not job work
