TaxTMI 
TaxTMI 
2018 (9) TMI 1647
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....y approval from Environment Ministry, Government of India. 1.2. After having gone through the merits of the applicability of GST on "Marg Sudharan Shulk", which was being charged and collected by applicant for the maintenance of forest road, from non government, private and commercial vehicles engaged in mining work in lieu of use of forest road, the Advance Ruling Authority while holding that Under GST, "the services by way of access to a road or a bridge on payment of toll charges" were included in the list of exempted services, ruled that no GST was leviable on 'Marg Sudharan Shulk'. 1.3. GST on "AbhivahanShulk": The Advance ruling authority found that the said "Abhivahan Shulk" is charged and collected by applicant in respect of forest produce carried out by a person. Ongoing through "The Uttrakhand Transit of Timber and Other Forest Produce Rules 2012", the authority observed that a person who desires to obtain forest produce is required to be registered with the forest department after paying applicable fee and the said "Abhivahan Shulk" is charged on the basis of quantum and quality of forest produce and the said forest produce must be accompanied with a transit pass i....
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.... for the issue, production and return of such passes and for the payment of fees therefore" 4. That THE UTTARAKHAND TRANSIT OF TIMBER AND OTHER FOREST PRODUCE RULES' 2012, have been formulated to implement the provisions of Indian Forest Act' 1927 and Chapter II of the said Rules deal with "Transit of Timber and other Forest Produce by Land" and Rule 3 which pertains to "Regulation of Transit of Forest Produce by Means of Permit", provides that "No forest produce shall be moved into, or from, or within the State of Uttarakhand except as hereinafter provided, without a transit pass in the form Schedule "A" to these rules......".Further Rule 5 which deals with "Fee Payable for Different classes of Passes" prescribes the system of issuance of passes and fee payable for the same. 5. Thus, in terms of the above, it stands well established that the Abhivahan Shulk (Transit Fee) is charged under Authority of Law and not for provision of any service. 6. That for determination that a particular sum received is exigible to GST or not, first of all the definition of Service needs to be considered. The same as per Section 2(102) stands as : "services means anything other than goods....
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....gulate the transit of forest produce. That Clause (b) of Subsection (1) of Section 7 deals with import of services therefore the same is not applicable. Further the relevant schedules I, II & III also nowhere stipulate that any Govt. Fee collected under a specific statue shall also be covered in the definition of service. 8. That in terms of the submissions made, the Abhivahan Shulk (Transit Fee) is not exigible to GST and in case such fee is held to be exigible to GST, in such a scenario all Govt. Fees and Levies charged under their specific statues shall become exigible to GST, which is not the intention of legislature, therefore it was prayed that Abhivahan Shulk (Transit Fee) may not be considered exigible to GST. That without prejudice to the submissions made hereinabove, it was further pleaded that if it was deemed that the Abhivahan Shulk (Transit Fee) charged by the appellant is for rendering service and is exigible to GST, the provisions of Notification No. 13/2017-CT(R) dated 28.06.2017 shall continue to apply and in terms of entry S.No. 5, GST, if any applicable, on the said Abhivahan Shulk (Transit Fee), shall be payable by the recipient of service under Reverse C....
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.... b. Transfer of forest produce by contractor's agency from the forests managed by the Forest Department, in which case the movement shall be regulated by the relevant conditions of sale and terms of the corresponding agreement deed executed by the buyer c. Further transfer of forest produce as may be exempted by the Government from the operation of these rules by notification in the official Gazette. Q4. What is the rate and methodology of collection of this fee? Is there any prescribed tariff? If yes, copy may please be submitted. Ans 4. That the fee is payable in terms of Rule 5 of THE UTTARAKHAND TRANSIT OF TIMBER AND OTHER FOREST PRODUCE RULES'2012. A copy of the same has already been submitted during the course of personal hearing. Q5. Under what accounting head is the fee deposited? Ans 5. The Fee is Deposited with State Govt. as Govt. Revenue under Code - 0406- 01- 800- 01- 03. A copy of sample challan is enclosed herewith as Annexure-I. Q6. What is the reason for imposition of this fee? How is the gross collection used and by which authority? Ans 6. The fee is charged in terms of the authorities granted under the Indian Forest Act' 1927, which....
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.... State Govt. as Govt. Revenue. A sample copy of challan is already enclosed as Annexure- I DISCUSSIONS & FINDINGS We have carefully gone through the order of the Authority on Advance Ruling dated 20.04.2018, appeal submissions, oral as well as written, by the appellant and relevant records. The main issues of contention, on taxability of Abhivahan Shulk, raised by the appellant against the Advance Ruling order inter alia, are- (i) that there is nothing in the definition which stipulates that even Govt. Fee collected under a specific statue shall also be covered in the definition of service. (ii) that Govt fee is not covered under scope of service as detailed in Section 7 (a) & (b). (iii) that in case such fee is held exigible to GST then in such a scenario all Govt. Fees and levies charged under specific statutes shall become exigible to GST, which is not the intention of the legislature; (iv) that the provisions of Notification No. 13/2017-CT(R) dated 28.06.2017 shall continue to apply and the same shall be payable by the recipient of service under Reverse Charge mechanism. Further the recipient of service shall also be entitled to benefit of exemption as cont....
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....e must be actual quid pro quo for a fee has undergone a sea change. The distinction between a tax and a fee lies primarily in the fact that a tax is levied as part of a common burden, while a fee is for payment of a specific benefit or privilege although the special advantage is secondary to the primary purpose of regulation in public interest, if the element of revenue for general purpose of the State predominates the levy becomes a tax. In regard to fee, there is, and must always be, correlation between the fee collected and the service intended to be rendered. In determining whether a levy is a fee, the true test must be whether its primary and essential purpose is to render specific services to a specified area or class; it may be of no consequence that the State may ultimately and indirectly be benefited by it. The power of any legislature to levy a fee is conditioned by the fact that it must be "by and large" a quid pro quo for the services rendered. However, co-relationship between the levy and the services rendered/expected is one of general character and not of mathematical exactitude. All that is necessary is that there should be a "reasonable relationship" between the le....
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....out of the forest area without any forest produce. Thus, this fee is directly related to the quality and quantity of the forest produce. The Uttarakhand Forest Department is incurring expenses in maintaining the administrative machinery for collection of the Abhivahan Shulk and they are required, by the Uttarakhand Transit of Timber and Other Forest Produce Rules 2012, to construct and maintain depots. All these expenses appear to be met up from the collection in the form of Abhivahan Shulk and the fact that this fee is deposited in the consolidated general head does not in any way change its character of being a fee. In return for this fee, the forest department is providing the service of maintaining and regulating the forest produce and ensuring the continued availability of the forest produce and its safe transit through the jurisdiction of forest department. These services are restricted only to the persons who are carrying the forest produce and have paid the Abhivahan Shulk. Thus, only a particular class of people, who are registered with the forest department and paying the said fee, in terms of THE UTTARAKHAND TRANSIT OF TIMBER AND OTHER FOREST PRODUCE RULES' 2012, e....
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.... (c) the activities specified in Schedule I, made or agreed to be made without a consideration (d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II. (2) Notwithstanding anything contained in sub-section (1),-- (a) activities or transactions specified in Schedule III; or (b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services. (3) Subject to the provisions of sub-sections (1), and (2), the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as- (a) a supply of goods and not as a supply of services; or (b) a supply of services and not as a supply of goods. A plain reading of the above statute clearly shows that sub-clause (2) is the exclusion clause and only goods or service falling under the Schedule III (clause a) or being included in any exception notificat....