TaxTMI 
TaxTMI 
TaxTMI 
2019 (11) TMI 479
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....rdingly is engaged in the business of mining and supply of iron ore As consideration for the mining lease with the license to extract iron ore from the lease area, the Applicant pays royalty to the State Government before removal of the minerals from the lease area. 2.1 In terms of Notfn No.13/2017- Central Tax (Rate) dated 28 06 2017 "the Business Entity located in the taxable territory shall be liable to pay GST under Reverse Charge Mechanism on the service supplied by the Central Government, State Government, Union Territory or Local Authority to a Business Entity. The Applicant is, thus, liable to pay GST on the royalty amount paid to the State Government under reverse charge mechanism. The Applicant has admitted the reverse charge liability and there is no dispute on this account. The Applicant has sought a ruling only on the rate at which GST is to be paid on reverse charge on the royalty paid to State Government during the period from 01.07.2017 to 31.12.2018. 2.2. The Advance Ruling Authority had examined the application and heard the Applicant. After hearing, the members did not agree on the issue of advance ruling on the rate of GST applicable to past supplies transacte....
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....Notification issued by the Government of Odisha prescribing the rate of GST applicable to supply of the like goods involving transfer of title will not apply to the mining lease service provided by the Government to the Applicant notwithstanding that the said service is classified under the Heading 9973 It was also observed by him that the rate of GST prescribed in column 4 against the residual services in clause (viii) of Entry Serial 17 of Notification No 11/2017 -CT (Rate) cannot simply be implemented for determining the rate of GST applicable to the mining lease provided by Government to all the mining lessees including the Applicant for the simple reason that the supply does not involve lease of any goods but rather conferment of the right to exploit and appropriate the minerals from the lease hold area during the currency of the lease agreement The supply being of the nature of conferring the right on the lessee to mine and appropriate the minerals, the rate prescribed for leasing of goods cannot be applied in this case Hence, the most appropriate rate shall be the default rate of 9% CGST & 9% OGST. 4.0 On reference by the Authority for Advance Ruling with differing observat....
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.... July, 2017 to December, 2018 and @18% during the period from 01 01 2019 The AAR of Rajasthan have also ruled that the mining lease service provide by Government of Rajasthan is classifiable under head 9973 and the said service attracts GST @ 18% (9% CGST and 9% SGST). The said ruling of AAR Rajasthan has also been upheld by the Appellate Authority on Advance Ruling Rajasthan vide their order No RAJ/AAAR/03/2019-20 dated 30 05.2019 = 2019 (8) TMI 1010 - APPELLATE AUTHORITY FOR ADVANCE RULING, RAJASTHAN AAR of Chhattisgarh, Haryana and Karnataka have also held that the rate of GST applicable for the period from 01 07.2017 to 31 12 2018 was the rate of GST applicable to the minerals AAR of Karnataka have also ruled that the rate of GST on the said service is 18% (9% CGST and 9% SGST) after 01 01 2019 Discussion & Finding: 5.0. We have considered the submission of the Applicant filed along with the application and also in the course of personal hearing. The Applicant has requested to pass an order holding that the Rate of GST, payable by them under Reverse Charge Mechanism, on royalty paid to Government for mining of iron ore for the period July, 2017 to December, 2018 would be 5 %....
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..... The scheme of classification of service mentions chapter 99 with sections and Headings describing the services which are taxable at notified rates. The relevant portion of the scheme of classification of service of Heading 9973 is as under. S.No. Chapter, Section, Heading or Group Service Code (Tariff) Service Description (1) (2) (3) (4) 232 Heading 9973 Leasing or rental services without operator 233 Group 99731 Leasing or rental services concerning machinery and equipment without operator 234 997311 Leasing or rental services concerning transport equipments including containers, without operator 235 997312 Leasing or rental services concerning agricultural machinery and equipment without operator 236 997313 Leasing or rental services concerning construction machinery and equipment without operator 237 997314 Leasing or rental services concerning office machinery and equipment (except computers) without operator 238 997315 Leasing or rental services concerning computers without operators 239 997316 Leasing or rental services concern....
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....y have been granted mining lease for extraction of iron ore in Odisha by the State Government on various terms and conditions as per the lease deed, inter alia on payment of Royalty to the State Government and sought a ruling on the rate of GST to be levied on such Royalty paid to the Government Admittedly, the Applicant has been awarded with a long term lease of the area specified in the lease agreement and has also been conferred the right to extract the minerals lying underneath for appropriation The right so conferred is not limited to using the minerals over the lease period but rather to appropriate the minerals extracted during the lease period Of course, extraction of minerals and removal thereof from the mines head is subjected to certain mining regulations In spite of that, the Government, as grantor of the right does not continue to enjoy title over the minerals extracted by the lessee Rather the lessee enjoy the title over the minerals extracted from the lease hold area and accordingly appropriates the property in the minerals by way of sale or otherwise. Thus, in the case of mining lease service granted by Government in favour of any licensee including the Applicant, o....
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....te applicable to supply of the underlying goods and further prescribing 18% GST for the residual services. They have examined the discussion points for the aforesaid amendment of Entry SI No. 17 of Notification No. 11/2017 dated 28 06.2017 and held that the amendment was merely clarificatory and not for enhancement of rate. We found the views taken by the Appellate Authority of Rajasthan quite logical and convincing. On the other hand, the rulings issued by the AAR of Haryana, Chhattisgarh and Karnataka in relation to the rate of GST applicable to mining lease services during the period from 01.07. 2017 to 31 12.2018 is devoid of any logic in as much as mining lease is not the same as lease of minerals for which the rate of GST applicable to minerals cannot be imported and applied for determining the rate of GST on mining services. The AAR of Madhya Pradesh did not issue ruling on the rate of tax applicable to mining lease. The ruling issued by them is on the classification of the service and that GST is also payable on the contributions made to DMF and NMET which is not before us for decision. 5.3.2. For determining the applicable rate of GST on the supply of aforesaid service, ....
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....thout operator, other than (i), (ii), (iii), (iv), (v), (vi) and (vii) above. Same rate of central tax as applicable on supply of like goods involving transfer of title in goods. -", 5.3.3.2 Furthermore, the Central Government, on the recommendations of the Council made inter-alia the following amendments in the notification No. 11/2017 -Central Tax (Rate), dated the 28-06-2017 vide notification no 27/2018-Central Tax (Rate) dated 31 12.2018 "(e) against serial number 17, for item (viii) in column (3) and the entries relating thereto in columns (3), (4) and (5), the following shall be substituted, namely:- (3) (4) (5) "(viia) Leasing or renting of goods Same rate of central tax as applicable on supply of like goods involving transfer of title in goods. - (viii) Leasing or rental services, with or without operator, other than (i), (ii), (iii), (iv), (v), (vi), (vii) (viia) above. 9 -", 5.3.3.3. We find that the Applicant in its application has relied upon the notified rate against SI.No. 17 of item (vi), as it stood prior to its amendment, for the entire period 01.07.2017 to 31.12.2018. Since, the service received by the Applicant is not at all leasing of goods but rat....
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....es, with or without operator, other than (i), (ii), (iii), (iv), (v), (vi), (vii) (viia) above. 18 Discussion 1. Heading 9973 of scheme of classification of services under GST includes "Group 99733; the licensing services for the right to use intellectual property and similar products". However, the rate notification No. 11/2017-CT (R) dated 28 06 2017, prescribes rate only for transfer or permitting the use or enjoyment of Intellectual Property Rights (IPR) No rate has been prescribed for transfer of intellectual property and similar products other than IPR. IPR, as held in several decisions of the Tribunal and the Courts, refers to rights in intellectual property protected by the relevant IPR law in force, intellectual property not protected by IPR law in force cannot be termed as IPR. 2. The residuary entry for the Heading 9973, i.e. entry SI. No. 17(viii) prescribes GST rate as "same rate of Central Tax as on supply of like goods involving transfer of title in goods". However, the intellectual property does not have underlying goods and thus the prescribed rate does not apply to transfer of intellectual property and similar products other than IPR. We have also gone through....
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....nda / Proposal / Discussion of the GST council, we are of the view that amendments have been carried out vide the aforesaid notification to clarify the legislative intent as well as to resolve the unintended interpretations It is well settled that the legislative intent cannot be defeated by adopting interpretations which is clearly against such interpretations 6.0. In this connection, we have also gone through and rely on the decision of the Hon'ble Supreme Court of India in the case of Collector of Central Excise, Shillong Versus Wood Craft Products Ltd (1995 (77) E.L.T 23 (SC)] = 1995 (3) TMI 93 - SUPREME COURT, where in a '3' judges Bench of the Hon'ble Court while interpreting amendments in Central Excise Tariff have observed in Para '19' as follows To quote: "In our opinion, the expression "similar laminated wood" in Heading No. 44.08 as it stood form the beginning must be construed to include within it block boards of all kinds so that the amendment in chapter Note 5 w.e.f. 19-3-19990 and thereafter w.e.f. 1-3-1992 merely clarified and made explicit that which was implicit in the heading throughout. These amendments were obviously made to end the dispute raised by the man....