CAMPA deposits as consideration for Government service held taxable and liable to GST under reverse charge.
Mandatory statutory deposits towards NPV, compensatory afforestation and allied CAMPA charges paid as a condition for diversion of forest land were treated as consideration for a Government service, because the approval to use forest land for non-forest purposes was directly linked to the payment and conferred a business benefit. The deposits were not covered by the exemption for services relating to municipal or panchayat functions, so Notification No. 12/2017-Central Tax (Rate) did not apply. As the recipient was a business entity receiving a taxable Government service, GST was held payable under reverse charge.
Issues: (i) Whether statutory deposits towards Net Present Value, compensatory afforestation and allied CAMPA charges for forest clearance constitute consideration for a supply of service by Government; (ii) whether such deposits are exempt under Notification No. 12/2017-Central Tax (Rate); and (iii) whether GST is payable under forward charge or reverse charge.
Issue (i): Whether statutory deposits towards Net Present Value, compensatory afforestation and allied CAMPA charges for forest clearance constitute consideration for a supply of service by Government.
Analysis: Grant of permission to divert forest land for non-forest use was held to be an activity undertaken by Government in furtherance of the applicant's business. The mandatory deposits were found to be directly linked to the grant of approval and were not voluntary payments. The amounts paid into the CAMPA fund were therefore treated as consideration within the meaning of section 2(31), and the grant of permission was treated as a supply of service within section 7.
Conclusion: Yes. The deposits constitute consideration for a supply of service by Government.
Issue (ii): Whether such deposits are exempt under Notification No. 12/2017-Central Tax (Rate).
Analysis: The exemption entries relied upon were confined to services in relation to functions entrusted to municipalities and panchayats under Articles 243W and 243G. Permission for diversion of forest land under the Forest (Conservation) regime was held not to fall within those exempt categories.
Conclusion: No. The deposits are not exempt under the notification.
Issue (iii): Whether GST is payable under forward charge or reverse charge.
Analysis: Once the transaction was characterised as a taxable supply of service by Government to a business entity, the conditions of Notification No. 13/2017-Central Tax (Rate) were held to be satisfied. The applicant, being a business entity receiving services from Government, was held liable to discharge tax under reverse charge.
Conclusion: GST is payable by the applicant under reverse charge mechanism.
Final Conclusion: The application was decided against the applicant on all substantive questions, with the CAMPA-related statutory deposits held taxable as consideration for a Government service and liable to GST under reverse charge.
Ratio Decidendi: A mandatory statutory payment made as a condition for obtaining governmental approval to use forest land for non-forest purposes constitutes consideration for a taxable service when the approval confers a legally enforceable business benefit, and the recipient business entity is liable to GST under the reverse charge notification applicable to Government services.