TaxTMI 
TaxTMI 
2021 (1) TMI 546
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..... BLACKTRAP classifiable under Heading 2517 and are leviable to GST on their supply at the rate of 5%. 3. The Applicant has been granted a mining lease for extracting Mineral called "BLACKTRAP" at village : Borvai, Taluka : Dhansura, Distt: Sabarkantha, State: Gujarat by the State Govt. on various terms and conditions as per the Grant Order and Lease deed. The applicant not only sells the Black Trap which is been excavated from the mine in the market, but it also uses the Black Trap aggregate material for its own use since the applicant main business is constructing state and national highways, city roads and bridges. On every tonne of Black Trap dispatched by the applicant, the applicant has to pay royalty to the State Govt of Gujarat for the right to use minerals including its exploration and evaluation. 4. The applicant has been granted a mining lease for a period of 20 years from 13th August 2013; that under part-V of the executed lease deed- To pay dead Rent or Royalty whichever is greater wherein it has been agreed that :- Rate and mode of payment dead rent: 1. The lessee/ lessees shall not be liable to pay in respect of any yearly period both the dead....
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....Whether said service can be classified under Tariff Heading 9973 as item No. (iii) Transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash deferred payment or other valuable consideration. Or item No. (viia) Leasing or renting of goods as any other service under the said chapter? (ii) What shall be the rate of GST on given services provided by State of Gujarat to applicant for which royalty is being paid? Grounds for application/interpretation of law : 7. The applicant submitted that he is of the view that service provided by the State govt. by transferring its right to use minerals including its exploration and evaluation against consideration received in form of Royalty or dead rent as the case may be is covered under chapter 9973 of service code either in • Item No. (iii) -Transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration in which rate of GST applicable as same rate of central tax as on supply of like goods involving transfer of title in goods. Since Blacktrap attract 5% GST Rate, royalty paid for mini....
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.... as amended, service provided by the State govt. may be fall under point No. (viia) Leasing or renting of goods. Because in general manner it consider as the State govt. has ultimately lease goods to them for specified period and against which they require to pay royalty or dead rent as the case may be to the state govt. 12. The applicant submitted that after consideration the Notification No. 11/2017-CT (Rate) dated 28.06.2017 as amended that if any service not falling under point No.(i) to (viia) then only it comes under point No. (viii) as residual service; that in their case as explained above and earlier explanations, the service provided by the state govt. falls either under point No. (iii) or (viia) clearly. It does not fall under point No. (viii) as residual service. Personal Hearing 13. Personal hearing in the matter was held on 17.082020. The authorised representative was appeared on behalf of the applicant and re-iterated the submission made in the Application. Findings and Discussion 14. We have considered the submissions made by the Applicant in their application for advance ruling. We also considered the issue involved, on which advance ruling is sought....
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....greed to be made without a consideration. (1A) where certain activities or transactions, constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II. Further, the activities mentioned in the Entry No. 2 of the Schedule II relate to the activities to be treated as supply of goods or supply of services with regard to the Land and Building, which are given as under: (a) Any lease, tenancy, easement, license to occupy land is supply of service Therefore, from the above, leasing of the Government land to the applicant to carry out the activity of the quarrying, is a supply of service to the applicant. 18. Regarding the classification of service received by the applicant Annexure to the Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 have been referred. The Annexure attached to the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 has defined the Service Accounting Code for each type of services, details of the following services, which are relevant to the transaction of the applicant is as under: Heading 9973 Leasing or ....
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....companies including Public Sector Undertakings for exploration of natural resources like oil, hydrocarbons, iron ore, manganese, etc. For having assigned the rights to use the natural resources, the licensee companies are required to pay consideration in the form of annual license fee, lease charges, royalty, etc. to the Government. The activity of assignment of rights to use natural resources is treated as supply of services and the licensee is required to pay tax on the amount of consideration paid in the form of royalty or any other form under reverse charge mechanism." 20. Therefore, payment of rent/royalty is for license given to extract minerals and the amount of rent/royalty paid is based on the quantum of mineral extracted. Hence it is covered under Service Accounting Code 997337 - Licensing services for the right to use minerals including its exploration and evaluation, as it is a license to extract mineral ore and also the right to use such minerals extracted. 21. The applicability of GST rate for the aforementioned service is based on the classification of service. In the present case, the mining rights so granted are covered under the sub-heading 9973 37 that spec....
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....ort service or scheduled air cargo service by way of transaction covered by clause (f) paragraph 5 of Schedule II of the Central Goods and Services Act, 2017", the service received by the applicant is not at all leasing of goods but rather "Licensing services for the right to use minerals including its exploration and evaluation accordingly, it needs to be seen whether the same is covered under Entry No. (vi) of Serial No. 17 attracting the tax rate which is same as that applicable on the supply of like goods involving transfer of title in goods or under the Serial No. 35 which is related to the other miscellaneous services including services nowhere else classified. 22.1 Serial No. 17 of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 was amended by Notification No. 31/2017-Central Tax (Rate), dated 13-10-2017 and entry no. (vi) was inserted, then after the amendment the entries look as under : No. Chapter, Section or Heading Description of Service Rate (per cent) Condition 17 Heading 9973 (Leasing or rental services, with or without operator) (i) ....................... (ii) ...........................
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.... after 1st July, 2020. (vii) Time charter of vessels for transport of goods. 2.5 Provided that credit of input tax charged on goods (other than on ships, Vessels including bulk carriers and tankers) has not been taken (please refer to Explanation no. (iv) (viii) Leasing or rental services, with or without 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 - 35 Heading 9997 Other services (washing, cleaning and dyeing services; beauty and physical well-being services; and other miscellaneous services including services nowhere else classified). 9 - 22.3 The Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017, Serial No. 17 was again amended by Notification No. 27/2018-Central Tax (Rate), dated 31-12-2018 and entry No. (viia) was inserted, then after the amendment the entries look as under : Sl.No. Chapter, Section or Heading Description of Service Rate (per cent) Condition 17 Heading 9973 (Leasing or rental services, with or without operator) ....
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....g transfer of title in goods OR Sl. No. (viia) "Leasing or renting of goods"- in which rate of GST applicable as Same rate of central tax as on supply of like goods involving transfer of title in goods. Since, the service received by the applicant is not at all leasing of goods but rather "Licensing services for the right to use minerals including its exploration and evaluation", the transaction is appropriately covered under the residual entry of Sl. No. '17' of the aforesaid notification and not under Sl. No. (iii) or Sl. No. (viia) as claimed by the applicant. The aforesaid description of service received by the applicant has subsequently been classified against item no. 'vii' [From 13-10-2017 to 24-1-2018] and item no. 'viii' from 25-1-2018 onwards. We also find that the GST rate so prescribed at Sl. No. 17(vi) or at clause (vii) or (viii) after amendment is not implementable due to the absence of any underlying goods. 22.5 On examining the Notification No. 27/2018-Central Tax (Rate), dated 31-11-12-2018 which has been issued on the recommendations of the GST Council to further amend the Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017, we find that the same has ....
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....ave underlying goods and thus the prescribed rate does not apply to transfer of intellectual property and similar products other than IPR. 22.6 On thoroughly examining the recommendation of the 31st GST Council it is observed that amendment of Entry Sl. No. 17(viii) was approved merely to clarify the GST rate applicable to the right to use Intellectual Property and similar products other than IPR which are covered under Group 99733. The impugned service received by the applicant is appropriately covered under description 'Licensing services for the right to use minerals including its exploration and evaluation' which is classifiable under SAC 9973 37 under Group 99733. From perusal of Point No. 1 of the Discussion, it is very much clear that the impugned Service is not classifiable under entry No. (iii) and (iv) of the Notification No. 11/2017-Central Tax (Rate). Perusal of Point No. 2 of the Discussion makes it clear that the rate under pre-revised Entry No. (viii) does not apply to "Licensing services for the right to use intellectual property and similar products other than IPR". Since the impugned Service is also the "Licensing services for the right to use intellectual prop....
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.... (3) TMI 93 - SUPREME COURT. In that case, this Court held that a clarificatory notification would take effect retrospectively. Such a notification merely clarified the position and makes explicit what was implicit. Clarificatory notifications have been issued to end the dispute between the parties. 16. In view of the consistent policy of the Government of exempting parts of power driven pumps utilized by the factory within the factory premises, it could not be said that while issuing Notification No. 46/94 of March 1, 1994, the exemption in respect of said item which was operative was either withdrawn or revoked. The action was taken only with a view to rescinding several notifications and by issuing a composite notification. The policy remained as it was and in view of demand being made by the Department, a representation was made by the industries and on being satisfied, the Central Government issued a clarificatory Notification No. 95/94 on April 25, 1994. It was not a new notification granting exemption for the first time in respect of parts of power driven pumps to be used in the factory tor manufacture of pumps but clarified the position and made the position explic....