Seeking relief from double taxation, industry body Association of Power Producers (APP) has urged the Central government to remove Goods and Services (GST) on import freight for coal used by fuel-starved electricity generating firms.
“We understand that several importers have challenged this levy of GST on ocean freight in various courts on the ground that once having paid IGST on full value of imported coal inclusive of freight element, charging GST again on ocean freight amounts to double taxation and is bad in law. However, till date, necessary notifications to address the same has not been issued,” APP Director General Ashok Khurana said in the letter to revenue secretary Ajay Bhushan Pandey.
Ever since the GST regime came into effect in mid-2017, power producers are compelled to pay GST on import freight for coal even after paying tax on the CIF (cost, insurance and freight) value of the imported dry fuel, the letter said. Producers are arguing that input credit of GST paid on imports isn’t available since power is out of GST ambit.
Even as the High Level Empowered Committee is devising means to alleviate stress in the power sector, Khurana said it is surprising to see that the issue of avoidable taxation remains unresolved. “It is a well-accepted that double taxation is unreasonable and against principles of equity. ...This anomaly should have been ratified long time ago,” Khurana said.
Close to a dozen imported coal dependent firms have approached the high courts of Mumbai, New Delhi and Gujarat seeking relief from double taxation. In last two years, companies such as JSW Energy, Global Coal Ventures, Victory Ventures and Vertigo Impex have filed petitions. Petition by trade body All India Bulk Importer and Exporters Association is pending before the Mumbai High Court.
Currently, India has one of the largest coal fired power generation capacities in the world with close to about 200 GW of installations.