Appeal Delay Under GST: AAAR Odisha Declines Condonation Beyond Statutory 30-Day Extension

Background of the Dispute

The matter in In re Essel Mining & Industries Limited (GST AAAR Odisha) arose from an appeal filed under Section 100 of the CGST Act, 2017 and the corresponding provisions of the Odisha GST Act, 2017. The assessee, M/s Essel Mining & Industries Limited, challenged Advance Ruling Order No. 01/ODISHA-AAR/2024-25 dated 27.08.2024 issued by the Odisha Authority for Advance Ruling (AAR).

The primary question before the AAR was whether the transfer of building and civil structures, including a railway siding, by the assessee to Odisha Mining Corporation Limited (OMC) should be treated as:

  • A sale of building falling under Clause 5 of Schedule III of the CGST Act, 2017 (i.e., treated as neither supply of goods nor supply of services), or
  • A taxable supply under the GST law.

The AAAR, however, never reached the merits of this classification issue. The appeal was dismissed solely on the ground of limitation, after the Authority concluded that it had no statutory power to condone the extensive delay beyond what Section 100(2) permits.

Facts Leading to the Advance Ruling

Mining Lease and Change of Lessee

  • The assessee, holding GSTIN-21AAACE6607L1ZU, operated iron and manganese mines in the Joda mining belt of District Kendujhar, Odisha.
  • The lease period ran from 01.10.1984 up to 31.03.2020 (as extended).
  • Upon expiry of the lease on 31.03.2020, the Government of Odisha allotted the same mining area to Odisha Mining Corporation Limited, a State PSU.

Transfer of Capital Assets

Post reallocation of the mines, OMC expressed its intent to purchase certain capital assets developed by the assessee for operating the mine, including:

  • Plant and machinery
  • Other equipment
  • Building infrastructure
  • Railway siding and associated civil structures

A handover deed was executed on 28.06.2023 for transfer of these assets on an “as is where is” basis.

The consideration agreed in the deed was:

  • Rs. 18,10,51,928/- for buildings and civil structures
  • Rs. 39,84,736/- for plant and machinery

GST Treatment Adopted by the Assessee

  1. Plant & Machinery

    • Treated as supply of goods under GST.
    • GST was duly charged and discharged on this component.

  2. Buildings and Civil Structures (including railway siding)

    • Considered by the assessee as immovable property.
    • Classified under Para 5 of Schedule III (sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building) read with Section 7(2)(a) of the CGST Act, 2017.
    • On this basis, the assessee treated the transaction as neither a supply of goods nor a supply of services, and hence, not liable to GST.

To obtain certainty on this position, the assessee approached the Odisha AAR for an advance ruling.

Ruling of the Authority for Advance Ruling (AAR)

The AAR, in Order No. 01/ODISHA-AAR/2024-25 dated 27.08.2024, held that:

  • The arrangement between the assessee and OMC for transfer of buildings, civil structures and railway siding, against consideration, was effectively a contractual agreement to refrain from removing the erected structures rather than an outright sale of building.
  • Consequently, the transaction was treated as a supply of service under Clause 5(e) of Schedule II of the CGST Act, 2017 (i.e. “agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act”).
  • The service was classified under SAC 999792 (other miscellaneous services) and held taxable at 18%, under Sl. No. 35 of Notification No. 11/2017-CT (Rate) dated 28.06.2017.

Aggrieved by this characterization, the assessee filed an appeal before the Odisha Appellate Authority for Advance Ruling (AAAR).

Timeline and Limitation Issue

Statutory Time Limits Under Section 100(2)

Section 100(2) of the CGST Act, 2017 lays down a strict statutory framework for filing an appeal against an AAR ruling:

  • Appeal must be filed within 30 days from the date on which the ruling is communicated to the applicant.