Forest permit fee as taxable consideration for tolerating an act; GST applies under reverse charge, not rental classification.

A forest permit fee collected for allowing coal transport through a forest area was treated as consideration for permitting or tolerating an act, bringing it within the scope of supply under Schedule II of the CGST Act, 2017. GST was therefore held payable on the fee under the reverse charge mechanism. The arrangement was also examined for classification under heading 9973 of Notification No. 11/2017-Central Tax (Rate), but that entry was found to cover leasing or rental services without an operator and not permission to transport through forest land. The service was therefore held not classifiable under heading 9973.

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Issues: (i) Whether GST is payable on the forest permit fee paid by the applicant under reverse charge mechanism. (ii) Whether the service, if taxable, is classifiable under heading 9973 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017.

Issue (i): Whether GST is payable on the forest permit fee paid by the applicant under reverse charge mechanism.

Analysis: The permit fee was collected for allowing movement of coal through forest area and was treated as consideration for permitting or tolerating an act arising from the legal obligation governing transport through the forest. Such forbearance was brought within the scope of supply under entry 5(e) of Schedule II to the Central Goods and Services Tax Act, 2017. The amount was therefore regarded as taxable consideration, and the liability was held to arise under the reverse charge entry applicable to the service.

Conclusion: GST is payable on the forest permit fee under reverse charge mechanism.

Issue (ii): Whether the service, if taxable, is classifiable under heading 9973 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017.

Analysis: Heading 9973 covers leasing or rental services without an operator, whereas the present levy concerned permission to transport coal through forest area and was characterised as tolerating an act under Schedule II to the Central Goods and Services Tax Act, 2017. On that basis, the service was found not to fall within heading 9973.

Conclusion: The service is not classifiable under heading 9973.

Final Conclusion: The forest permit fee was held taxable as consideration for a deemed service of tolerating or allowing an act, and the applicant was denied classification under the cited leasing or rental heading.

Ratio Decidendi: A fee collected for permitting transport through forest area can constitute consideration for tolerating or allowing an act and is taxable as a deemed supply of service, not as leasing or rental service without an operator.

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