JSW Steel has
moved the Appellate authority within GST department of Odisha against the
demand notice of ₹2,678 crore towards tax, penalty and interest on JSW mining
company in the State.
The company had
started mining operation at Nuagoan, Jajang, Koira and Ganua mines, for which
lease was granted by the State government, by paying applicable bid premium,
royalty and other statutory fees in addition to ₹1,510 crore towards GST on
Reverse Charge Mechanism basis.
Input tax credit
As per the
provisions of GST law, JSW Steel was eligible to avail ITC of ₹1,510 crore
towards payment of output tax liability. The company utilised ₹271 crore for
discharging output tax liability on actual supply of iron ore.
unutilised ITC of ₹1,239 crore was transferred to parent company in Mumbai for
support service and subsequently distributed it to other units of JSW Steel
located in different states for their utilisation.
In March, the GST wing of
Odisha had raised objection claiming revenue loss and issued demand
notice of ₹2,678 crore including interest and penalty on JSW Steel, Barbil and
pay the same within one month of issue of the order.
JSW Steel had
moved the Odisha High Court and subsequently Supreme Court seeking interim
relief, but was directed to move the GST department without offering any
Joint Managing Director, JSW Steel, told businessline that the case was due to
the anomaly in GST rate whereby the tax on input was higher that of the output
goods and this was corrected subsequently about six months back.
In the case of JSW
Steel, he said the iron ore mining subsidiary company paid 18 per cent GST on
premium on mining and when iron ore was sold to the parent companies the GST
rate was five per cent.
This led to
accumulation of GST credit (of about ₹1,510 crore) at the mining company level.
As per GST regulation, when the output tax is lower than the input tax
companies can claim refund when goods are involved but not in the case of
Since iron ore
mining was a service to the parent company, the mining subsidiary could neither
claim refund nor utilise it due to inverted duty structure. Moreover, GST
regulations does not allow set-off of accumulated GST credit in one state to
another state. However, he said there is provision in GST to claim credit at
the head-office level in case of accumulation of credit. JSW Steel utilised
this and distributed it to manufacturing plants in Vijayanagar and Dolvi since
the Odisha mining company was selling iron ore to these plants, he said.
However, the GST department believes that the accumulated GST credit cannot be
distributed to other states, he added.