GST Applicability to GMVN's Licensing Services for Minerals: Court Rules 5% Tax Rate

The court classified the services provided by Garhwal Mandal Vikas Nigam (GMVN) under "Licensing services for the right to use minerals including its exploration and evaluation" with a service code of 997337. The court determined that the services rendered by GMVN to the applicant, for which royalty was paid, attracted GST at a rate of 5% during the period from 01.07.2017 to 31.12.2018.

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Issues Involved:
1. Classification of service provided by Garhwal Mandal Vikas Nigam (GMVN) to the applicant.
2. Whether the service is classified under Service Code (Tariff) 9973, specifically under 997337.
3. Rate of GST for the period 01.07.2017 to 31.12.2018 on services provided by GMVN to the applicant for which royalty is being paid.

Detailed Analysis:

Issue 1: Classification of Service Provided by GMVN
The applicant sought an advance ruling on the classification of the service provided by GMVN in terms of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. GMVN has been allotted mineral areas in revenue rivers of Garhwal region to extract accessory minerals (sand, gravel, boulders) after paying the required fees and fulfilling administrative/legal formalities. GMVN further allots this work to the applicant and charges consideration in the form of money, from which GMVN pays the prescribed fees as royalty to the Uttarakhand Government.

Issue 2: Service Classification under Service Code (Tariff) 9973
The services rendered by GMVN are covered under serial no. 257 of the Annexure appended to Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as "Licensing services for the right to use minerals including its exploration and evaluation," having service code (tariff) 997337.

Issue 3: Rate of GST for the Period 01.07.2017 to 31.12.2018
The rate of GST for the services provided by GMVN to the applicant for which royalty is being paid is determined by Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 and its subsequent amendments. The relevant notification specifies that the service "Licensing services for the right to use minerals including its exploration and evaluation" falls under the residual entry (viii) of serial no. 17, which implies that the service attracts GST at the same rate as on the supply of like goods involving transfer of title in goods during the period 01.07.2017 to 31.12.2018. The goods involved (sand, gravel, and boulders) attract GST at 5%, thus the supply of service in question also attracts GST at 5% during the specified period.

Order:
1. The services rendered by GMVN are covered under serial no. 257 of the Annexure appended to Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as "Licensing services for the right to use minerals including its exploration and evaluation."
2. The service "Licensing services for the right to use minerals including its exploration and evaluation" is classified under Service Code (Tariff) 997337.
3. The services rendered by GMVN to the applicant during the period 01.07.2017 to 31.12.2018 attract GST at the same rate as on the supply of like goods involving transfer of title in goods, i.e., 5%.

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