Abhivahan Permission Shulk paid to Forest Department for coal transportation permits liable to GST under Section 2(33) CGST Act 2017

The AAAR ruled that Abhivahan Permission Shulk paid to the Forest Department for coal transportation permits is liable to GST. The authority determined that these fees, collected for monitoring mining activities and coal movement, do not qualify for exemption under urban forestry or social forestry provisions. Despite individual transactions being under Rs. 5,000, the court held this constitutes continuous supply of service under Section 2(33) of CGST Act 2017, as the power company makes recurring payments throughout the year for regular coal clearance from forest areas. The aggregate annual amount exceeding Rs. 5,000 disqualifies the exemption under Notification 12/2017.

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Issues Involved:
1. Whether the amount paid to the Forest Department as Abhivahan Permission Shulk is liable to be taxed under GST or exempt as per SI. No. 4 and 5 of the Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017.
2. Whether each transaction of Abhivahan Shulk, being less than Rs. 5000/- per transaction, is exempt under SI. No. 9 of the Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017, as it is not covered by the definition of continuous supply of service u/s 2 (33) of the CGST Act 2017.

Issue-Wise Detailed Analysis:

Issue 1: Taxability of Abhivahan Permission Shulk under GST

The appellant, a power generation company, contended that the Abhivahan Permission Shulk paid to the Forest Department should be exempt from GST under SI. No. 4 and 5 of Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017. They argued that this fee is a pure service used for urban forestry, environmental protection, and ecological promotion, functions entrusted to Municipalities and Panchayats under Articles 243G and 243W of the Constitution.

The relevant provisions of Notification No. 12/2017-Central Tax (Rate) were examined:
- SI. No. 4 and 5 exempt services by the government related to functions entrusted to municipalities under Article 243W and Panchayats under Article 243G, respectively.

The functions under Article 243G and 243W include social forestry, farm forestry, urban forestry, and environmental protection. However, the Abhivahan Shulk is a fee for granting permission for the transit of forest produce (coal) and is used by the Forest Department to monitor mining activities and the movement of forest produce, not for urban forestry or environmental protection.

Thus, the Abhivahan Shulk does not fall under the functions listed in Articles 243G and 243W. Consequently, the appellant's contention that the Abhivahan Shulk is exempt from GST under SI. No. 4 and 5 of Notification No. 12/2017-Central Tax (Rate) was rejected. The fee is classified under residuary Heading 9997 for other services, attracting CGST @ 9% and CGGST @ 9% under reverse charge mechanism as per Serial No. 5 of Notification No. 13/2017-Central Tax (Rate), dated 28-6-2017.

Issue 2: Exemption under SI. No. 9 of Notification No. 12/2017-Central Tax (Rate)

The appellant argued that each transaction of Abhivahan Shulk is less than Rs. 5000/- and should be exempt under SI. No. 9 of Notification No. 12/2017-Central Tax (Rate). They claimed these transactions are not continuous supplies of service as defined under Section 2 (33) of the CGST Act 2017.

Notification No. 12/2017-Central Tax (Rate) exempts services provided by the government where the consideration does not exceed Rs. 5000/-, unless it is a continuous supply of service. Section 2 (33) defines continuous supply of services as those provided continuously or recurrently under a contract for more than three months with periodic payment obligations.

The appellant pays the Abhivahan Shulk regularly throughout the year for coal transit, making it a continuous service. Despite being charged per vehicle, the recurring nature of these payments for ongoing coal transit qualifies it as a continuous supply of service.

Since the total Abhivahan Shulk paid exceeds Rs. 5000/- in a financial year, the exemption under SI. No. 9 of Notification No. 12/2017-Central Tax (Rate) does not apply. Therefore, the appellant is liable to pay GST on the Abhivahan Shulk.

Rulings:
1. The amount paid by the appellant to the Forest Department as Abhivahan Permission Shulk is liable for GST at the applicable rate and is not eligible for a "Nil" rate of tax under SI. No. 4 and 5 of Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017.
2. The appellant is not eligible for a "Nil" rate of tax on the Abhivahan Shulk under SI. No. 9 of Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017.

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