GST Applicability to Abhivahan Shulk Paid by CSPGCL: Ruling on Reverse Charge Mechanism

The court held that the "Abhivahan Shulk" paid by CSPGCL to the Forest Department of Chhattisgarh is subject to GST under the reverse charge mechanism. It was determined that the "Abhivahan Shulk" does not qualify for exemptions under Notification No. 12/2017 and should be classified under Heading 9997 for other services with a tax rate of CGST@ 9% and CGGST@ 9%. CSPGCL is liable to pay GST on the "Abhivahan Shulk" under the reverse charge mechanism as per Serial No. 5 of Notification No. 13/2017.

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Issues Involved:
1. Applicability of GST on "Abhivahan Shulk" under the provisions of the reverse charge mechanism.
2. Exemption from GST for "Abhivahan Shulk" under Notification No. 12/2017.
3. Classification and tax rate applicable to "Abhivahan Shulk".

Detailed Analysis:

Issue 1: Applicability of GST on "Abhivahan Shulk" under the provisions of the reverse charge mechanism

The applicant, Chhattisgarh State Power Generation Company Limited (CSPGCL), sought an advance ruling on whether the "Abhivahan Shulk" paid to the Forest Department of Chhattisgarh is liable to GST under the reverse charge mechanism. The authority clarified that under Section 9(3) of the GST Act, the government may specify categories of supply of goods or services for which the tax shall be paid on a reverse charge basis by the recipient. Notification No. 13/2017 specifies that services supplied by the State Government to a business entity are subject to GST under the reverse charge mechanism. Since the Forest Department of Chhattisgarh is providing the service, CSPGCL, as the recipient, is liable to pay GST under the reverse charge mechanism.

Issue 2: Exemption from GST for "Abhivahan Shulk" under Notification No. 12/2017

CSPGCL argued that "Abhivahan Shulk" should be exempt from GST under clauses 4 and 5 of Notification No. 12/2017, as it is a pure service used for "Urban forestry, protection of the environment and promotion of the ecological aspect," functions entrusted to municipalities and panchayats under Articles 243G and 243W of the Constitution. However, the authority found this interpretation misplaced. The "Abhivahan Shulk" is a transit fee for the movement of forest produce (coal) through a forest area, not a service related to urban forestry or environmental protection. Therefore, it does not qualify for the exemptions under clauses 4 and 5 of Notification No. 12/2017.

Issue 3: Classification and tax rate applicable to "Abhivahan Shulk"

CSPGCL also contended that each transaction of "Abhivahan Shulk" is less than Rs. 5000 and should be exempt under Sl. No. 9 of Notification No. 12/2017. The authority rejected this argument, stating that the coal block allocation and subsequent coal movement are continuous activities, not separate transactions. The transit fee is a consideration for permission to transport coal, and the exemption under Sl. No. 9 does not apply to the transport of goods. The authority concluded that "Abhivahan Shulk" should be classified under Heading 9997 for other services, with a tax rate of CGST@ 9% and CGGST@ 9%. CSPGCL is liable for GST on "Abhivahan Shulk" under the reverse charge mechanism as per Serial No. 5 of Notification No. 13/2017.

Order:
1. The "Abhivahan Shulk" paid by CSPGCL to the Forest Department of Chhattisgarh is liable for GST at the applicable rate and is not eligible for the "Nil" rate under Sr. No. 4 and 5 of Notification No. 12/2017.
2. CSPGCL is not eligible for the "Nil" rate of tax on "Abhivahan Shulk" under Sl. No. 9 of Notification No. 12/2017.
3. "Abhivahan Shulk" merits classification under Heading 9997 for other services with a tax rate of CGST@ 9% and CGGST@ 9%, and CSPGCL is liable for GST under the reverse charge basis as per Serial No. 5 of Notification No. 13/2017.

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