Coal beneficiation and transportation services are independent with separate GST rates under SAC 9997 and SAC 9965

AAR MP ruled that coal beneficiation and transportation services are independent services with separate pricing and equal importance. Coal beneficiation services under SAC 9997 attract 18% GST. Transportation services under SAC 9965 are taxable at 12% GST, or 5% if the supplier does not claim input tax credit. Neither service is predominant over the other, requiring separate tax treatment based on their respective classifications.

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Issues: Classification of GST rates for transportation services and coal beneficiation services under the GST Law.

Classification of Services:
The case involved a query regarding the classification of GST rates for transportation services and coal beneficiation services under the GST Law. The applicant, a power generating company, sought clarification on whether charging GST at 5% on transportation services by a Goods Transport Agency (GTA) and 18% on coal beneficiation and loading charges complied with the GST Law.

Applicable GST Rates:
The concerned officer opined that coal beneficiation and transportation of coal are distinct services attracting individual rates of 18% and 12%, respectively. However, if the transporter does not avail input tax credit, the applicable rate would be 5%. In case the company is liable to pay tax under Reverse Charge Mechanism, the GST rate would also be 5%.

Submissions and Arguments:
During the personal hearing, the applicant's representatives reiterated that the services of transportation and coal beneficiation were separate and did not constitute a composite or mixed supply under the CGST Act. They highlighted that the tender document clearly specified separate prices for each service, indicating their independent nature.

Authority's Findings:
The Authority carefully considered the submissions and found that both services were independent of each other, with separate pricing mentioned in the tender document. As neither service could be deemed predominant, they were to be taxed individually. Accordingly, coal beneficiation services were classified under SAC 9997, attracting an 18% GST rate, while transportation services fell under SAC 9965, with a 12% GST rate applicable unless the supplier did not avail input tax credit, in which case the rate would be 5%.

Ruling:
The Authority ruled that coal beneficiation and transportation services were distinct supplies attracting GST rates of 18% and 12%, respectively. The ruling was deemed valid subject to the provisions of the GST Act until declared void under the relevant sections.

This detailed analysis of the judgment provides insights into the classification of services and the applicable GST rates for transportation and coal beneficiation services under the GST Law.

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