GST Council likely to provide cost relief to coal washeries by extending exemption, say sources

The goods and services tax council in its meeting on February 18 is likely to provide relief to the washeries by extending the exemption from compensation cess on coal rejects both supplied to and by these in order to avoid double taxation, sources told Moneycontrol.

“The fitment committee has recommended that exemption benefit should cover rejects supplied to and by a washery, arising out of coal on which compensation cess has been paid and no input tax credit thereof has been availed by any person. The proposal is likely to be discussed and approved by the Council,” an official said on condition of anonymity.

Currently the exemption has been provided only on rejects supplied by a washery arising out of coal, provided compensation cess has been paid on raw material and no input tax credit thereof has been availed by any person.

Principal users like power companies pay compensation cess on the entire quantity of raw coal purchased and send it to washeries for beneficiation. Washed coal is sent back to the power companies while the coal rejects are sold by the power companies to the washeries.