In Order No. 02/AAAR/PSPCL/2023 -AAAR- AAAR (Punjab) confirms Appellate Authority's power to remand appeals to AAR
Members Rajesh Puri (Chief Commissioner) & Kamal Kishor Yadav (IAS Commissioner) [20-03-2023]

Read Order: In Re: Punjab State Corporation Power Limited

Chahat Varma

New Delhi, July 6, 2023: The Punjab bench of the Appellate Authority for Advance Ruling (AAAR) has clarified that the appellate authority has the power to remand back an appeal to the Authority for Advance Ruling (AAR) for fresh consideration.

The ruling came in response to an appeal filed by M/s Punjab State Power Corporation Limited (PSPL), a Punjab Government undertaking involved in the generation and distribution of electricity. The appellant had sought an advance ruling regarding the taxability of coal rejects and the eligibility to avail Input Tax Credit (ITC) on raw coal.

The Punjab AAR had previously ruled that coal rejects were to be classified under I-ISN 2701 and were taxable at a 5% GST rate plus a compensation cess of Rs 400 per metric ton (PMT). The AAR had further ruled that if the appellant fulfilled the eligibility conditions prescribed under Section 16 of theCentral Goods and Services Tax Act(CGST Act) and Punjab Goods and Services Tax Act(PGST Act), and if the type of ITCdid not fall under the categories prescribed under Section 17 of the CGST Actand PGST Act, the appellant was eligible to avail ITC of GST and Compensation Cess on raw coal purchased from suppliers and transferred to a washery/job worker for cleaning. Additionally, it was ruled that the formula prescribed under Rule 42 of the CGST and PGST Rules, for determining ITC in respect of inputs or input services and reversal thereof was applicable in both GST and Compensation Cess cases.

However, the two-member bench of Rajesh Puri (Chief Commissioner) and Kamal Kishor Yadav (IAS Commissioner) found that the issue of maintainability was not examined at the AAR stage and needed re-examination.

The bench noted that since the power of remand back was not explicitly detailed in the CGST Act, it was appropriate to consider similar provisions in other acts. In this regard, the bench specifically looked at the powers granted to the Commissioner (Appeals) under the erstwhile Central Excise Act, 1944, and also referred to sub-section (5) of Section 85 of the Finance Act, 1994.

The bench also referred to Commissioner of Service Tax Vs. Associated Hotels Ltd. [LQ/GujHC/2014/662], wherein the Gujarat High Court had observed that if a proper inquiry was not conducted or the proceedings were decided ex-parte, it was not necessary for the Commissioner (Appeals) to take on the role of the adjudicating authority and conduct a complete inquiry. In such cases, the Commissioner (Appeals) had the discretion to remand the proceedings, and there were no limitations on their powers to do so.

Thus, without delving into the merits of the case, the bench remanded the appeal of the appellant back to the AAR for re-examination of the maintainability of the application under the CGST Act. The AAR was directed to determine whether the application falls under subsection (2) of Section 97 of the CGST Act, and subsequently pass an order on its maintainability.