Important Keyword: Notification No. 1/2023 - Compensation Cess (Rate), Coal Rejects GST, Compensation Cess Amendment, GST on Coal Washeries, GST Council update March 2023,
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[F. No. CBIC-190354/21/2023-TO(TRU-II)-CBEC]
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)
New Delhi, the 28th February, 2023
Notification No. 1/ 2023 - Compensation Cess (Rate): Seeks to amend notification no. 1/2017- Compensation Cess (Rate), dated 28.06.2017
[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]
G.S.R (E).- In exercise of the powers conferred by sub-section (2) of section 8 of the Goods and Services Tax (Compensation to States) Act, 2017 (15 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following further amendments in the notification of the Government of India, Ministry of Finance (Department of Revenue), No. 1/2017-Compensation Cess (Rate), dated the 28th June, 2017 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 720(E)., dated the 28th June, 2017, namely:-
In the said notification, in the Schedule, against Sl. No. 41A, in column (3), for the entry, the following entry shall be substituted, namely: -
“Coal rejects supplied to a coal washery or by a coal washery, arising out of coal on which compensation cess has been paid and input tax credit thereof has not been availed by any person”.
2. This notification shall come into force on the 1st day of March, 2023.
(RAJEEV RANJAN)
Under Secretary
Note: - The principal notification No. 1/2017-Compensation Cess (Rate) dated the 28th June, 2017 was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 720(E), dated the 28th June, 2017 and was last amended vide notification No. 2/2021-Compensation Cess (Rate), dated the 28th December, 2021, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R.901(E), dated the 28th December, 2021.
📚 Frequently Asked Questions (FAQs): Notification No. 1/2023 - Compensation Cess (Rate)
Q1: What is Notification No. 1/2023 - Compensation Cess (Rate)?
Answer:
This notification, issued on 28th February 2023, amends Notification No. 1/2017 - Compensation Cess (Rate). It redefines the entry at Sl. No. 41A in the Schedule to clarify GST treatment for coal rejects supplied to or by coal washeries, provided compensation cess has already been paid and no ITC is availed.
Q2: What exactly is a coal reject, and why is it mentioned in GST?
Answer:
A coal reject is the low-quality residue generated during coal washing. It still contains combustible material and is often reused. Under this notification, such rejects will not attract further compensation cess if:
✅ They arise from coal on which cess was already paid
✅ No input tax credit (ITC) is claimed by any party
Q3: What change has been made to Sl. No. 41A in the original notification?
Answer:
The new substituted entry reads:
“Coal rejects supplied to a coal washery or by a coal washery, arising out of coal on which compensation cess has been paid and input tax credit thereof has not been availed by any person.”
This ensures that double taxation is avoided on coal rejects under compensation cess. 👉 Get GST Compliance Help
Q4: Who benefits from this amendment?
Answer:
This change is beneficial to:
Coal washeries who process and supply coal rejects
Thermal power plants or cement units who buy coal rejects
Logistics operators in the coal value chain
The rule avoids cess duplication, promoting ease of doing business. ⚙️ Setup your coal-related business legally
Q5: Is this amendment retrospective?
Answer:
❌ No. This notification comes into force from 1st March 2023. It will not apply to past transactions.
Q6: Is ITC completely disallowed on the original coal used to produce rejects?
Answer:
Yes. The exemption applies only if no input tax credit (ITC) has been availed on the original coal from which the rejects are produced. If ITC is claimed, this exemption won’t apply.
Q7: What does this mean for coal washeries' billing and GST returns?
Answer:
Washeries must:
Maintain clear documentation proving cess was paid on original coal
Ensure no ITC is claimed on that cess
Reflect the supply of coal rejects separately in GST returns
Need assistance? 📊 File GST Returns Seamlessly
Q8: How does this align with GST Council decisions?
Answer:
This amendment reflects the GST Council’s broader goal of reducing compliance costs, avoiding cascading taxes, and clarifying cess obligations in niche industries like coal processing.
Q9: How can Finodha.in support coal washeries and related businesses?
Answer:
At Finodha.in, get full support for:
✅ GST registration: Apply Now
✅ Cess advisory for mining/coal units
✅ Return filing and GST computation: Start Filing
✅ Company registration (Pvt. Ltd, OPC): Explore Options
✅ DSC for GST filings: Apply Here
Summary 📌
Notification No. 1/2023 - Compensation Cess (Rate) ensures no double cess on coal rejects supplied to or from coal washeries when cess was already paid on the base coal and ITC is not claimed. Effective from 1st March 2023, this aims to streamline tax treatment in the coal sector.
Need help with GST advisory for the coal industry?
🔗 Talk to GST Professionals at Finodha.in
Download PDF: Notification No. 1/2023 - Compensation Cess (Rate)
More Information: https://taxinformation.cbic.gov.in/
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