Classification of services for mining applicant in Haryana under GST Notification

The case involved the classification of services provided by the State of Haryana to a mining applicant for which royalty was paid under Notification No. 11/2017-CT (Rate). The authority determined that the services fell under group 99733 for "Licensing services for the right to use minerals," with an applicable GST rate of 18% (9% CGST + 9% SGST). The ruling clarified the classification and tax rate based on the CGST Act and relevant notifications.

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Issues:
Classification of service provided by the State of Haryana to the applicant for which royalty is being paid under Notification No. 11/2017-CT (Rate) dated 28.06.2017.
Rate of GST on the services provided by the State of Haryana to the applicant for which royalty is being paid.

Classification of Service:
The applicant, engaged in mining, sought clarification on the nature of service provided by the State Government of Haryana and the applicable GST rate. The applicant argued that the royalty paid is for the right to use minerals granted under the lease. The authority analyzed relevant provisions such as Section 9 of the CGST Act 2017 and Notification No. 11/2017-CT (Rate). It was determined that the service falls under group 99733, specifically under 997337 for "Licensing services for the right to use minerals including its exploration and evaluation." Therefore, the royalty paid constitutes consideration for the transfer of the right to use minerals.

Rate of GST:
Regarding the rate of GST on the services provided, the authority examined the amended Notification No. 11/2017-CT (Rate) dated 28.06.2017, effective from 01.01.2019. It was found that the service in question does not fall under leasing or renting of goods but under "licensing services for the right to use minerals." As a result, it was classified under the residual entry at Serial No. 17 (viii) of Heading 9973. Consequently, the applicable GST rate for the services provided by the State of Haryana to the applicant, for which royalty is paid, was determined to be 18% (9% CGST + 9% SGST).

Conclusion:
The advance ruling concluded that the services provided by the State of Haryana to the applicant, involving the right to use minerals, are classified under group 99733 and are subject to an 18% GST rate. The ruling provided clarity on the classification and applicable tax rate for the services in question, based on the provisions of the CGST Act and relevant notifications.

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