Maintenance of township is not integrally tied to business activities, thus ITC claims related to township electricity supply are invalid.

ORDER :

Sanjay K. Agrawal, J.

1. Feeling aggrieved and dissatisfied with the impugned order dated 17-9-2020 passed by the Joint Commissioner (Appeals), State Tax, Bilaspur, the petitioner herein namely, Bharat Aluminium Company Limited (BALCO) has filed these appeals calling in question legality, validity and correctness of the same by which its appeals preferred under Section 107 of the Chhattisgarh Goods and Services Tax Act, 2017 have been dismissed affirming the order dated 6-7-2019 passed by the Assistant Commissioner, State Tax, Korba, Circle-2, directing recovery of Rs. 40,14,605/-.

(It is pertinent to mention here that W.P.(T)No.14/2021 relates to ITC claim for the month of February, 2019; W.P.(T)No.15/2021 relates to ITC claim for the month of August, 2019; W.P.(T)No.16/2021 relates to ITC claim for the month of January, 2019; W.P.(T)No.17/2021 relates to ITC claim for the month of December, 2018 and W.P.(T)No.18/2021 relates to ITC claim for the month of November, 2018.)

2. Since common question of law and fact is involved in these writ petitions, they are being disposed of by this common order.

3. The aforesaid challenge has been made on the following factual backdrop: -

4. The petitioner is engaged in manufacture, sale and export of aluminium products and it has its factory premises at Korba, Chhattisgarh. For the purposes of its business operations, the petitioner has established two power plants of 540 MW and 1200 MW at Korba. The petitioner imports coal on due payment of Goods and Services Tax (GST) Compensation Cess and uses the same for generation of electricity using the two power plants which is further used for manufacture of aluminium products. The petitioner also claims to maintain a residential township for its employees. It is the case of the petitioner that the electricity which is generated from the two power plants is used in three manners: (a) firstly, electricity from the power plants is used for manufacturing operations within the factory premises; (b) secondly, some portion of the electricity is sold to State Electricity Boards; and (c) lastly, some portion of the electricity (540 MW) is supplied to the township for its employees, and the present dispute is confined to the portion of electricity which is supplied to the township of its company.

5. The petitioner herein filed an application for refund in terms of Section 54(1) of the Central Goods and Services Tax Act, 2017 (for short, ‘the CGST Act’) claiming refund of the Input Tax Credit (ITC) of the Compensation Cess paid on import of coal. The refund claimed by the petitioner was to the tune of Rs. 7,44,73,347/- for the month of February, 2019 on 1^st April, 2019 on the premise that the petitioner being exporter of aluminium products is entitled for the ITC of the GST Compensation Cess paid on the inputs i.e. coal used for generation of electricity. On 6-5-2019, provisional refund of 90% of the total refund claimed was allowed to the tune of Rs. 6,70,26,012/- and show cause notice was issued to the petitioner on 7-6-2019 vide Annexure P-5 as to why the refund claimed to the extent of Rs. 51,48,531/- should not be rejected to which the petitioner filed its reply on 19-6-2019 vide Annexure P-6 clarifying the bifurcation in the usage of the two power plants by filing Form G, which is a statutory form, and stating that the electricity supplied to the township is for ‘business’ purposes, no reversal is warranted and the petitioner also stated that GST Compensation Cess paid on import of coal is not attributable to the supply of Duty Credit Scrips (DCS) and no portion of the same is used for supply of DCS. In Form G – Electricity Duty, it has been mentioned that 1388641 KWH electrical energy i.e. total number of units, was consumed in the Township Col