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Issues: (i) Whether the permit fee paid to the forest department for transit of coal constitutes a supply of services exigible to GST under reverse charge; (ii) Whether the service is classifiable under heading 9973 or falls within the exempt category claimed by the applicant.
Issue (i): Whether the permit fee paid to the forest department for transit of coal constitutes a supply of services exigible to GST under reverse charge.
Analysis: The permit charges were levied for issuing transport permits without which the coal could not be moved. The consideration was paid to the forest department for enabling transport and for regulatory oversight of mining movement, which amounted to provision of a service by the government. Where such service is supplied by the government to a business entity and the supplier is not registered, tax is payable by the recipient under reverse charge.
Conclusion: The amount paid as forest permit fee is a supply of services and GST is payable on reverse charge basis.
Issue (ii): Whether the service is classifiable under heading 9973 or falls within the exempt category claimed by the applicant.
Analysis: The service was held to be one of public administrative services relating to regulation of forest operations and movement of mineral produce, falling under the relevant classification under Notification No. 11/2017. The exemption for services connected with functions entrusted to Panchayats and the plea of social forestry or farm forestry were rejected because the permit fee was collected for monitoring mining activity and transport of produce, not for those exempt functions.
Conclusion: The service is classifiable as public administrative services under the relevant entry in Notification No. 11/2017 and is not entitled to the claimed exemption or lower rate.
Final Conclusion: The appellate ruling substantially affirms taxability of the forest permit fee as a taxable government service liable in the hands of the recipient under reverse charge, and rejects the claimed classification and exemption.
Ratio Decidendi: A regulatory fee paid to the government for issuing a permit necessary for transport of mineral produce is consideration for a taxable service, and where the service falls within public administrative functions rather than an exempt function, GST is payable under reverse charge by the recipient.
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