TaxTMI 
TaxTMI 
2021 (9) TMI 1290
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....ccordance with Notification No. 11/2017-CT (Rate) dated 28.06.2017 read with annexure attached to it, issued by the State Government to M/s Raj Quarry Works, for which royalty is being paid. Whether said service can be classified under Tariff Heading 9973, specifically under 997337 as Licensing services for the right to use minerals including its exploration and evaluation or as any other service? (ii) What is rate of GST on given services provided by State of Gujarat to M/s Raj Quarry Works for which Royalty is being paid? (iii) Whether services provided by the State Government is governed by applicability of Notification No. 13/2017-CT(Rate), dated 28.06.2017 under entry number 5 and whether M/s Raj Quarry Works is taxable person in this case to discharge GST under reverse charge mechanism or whether given service is covered by exclusion clause number (1) of entry no 5 and State Government is liable to discharge GST on same? 3.1 The GAAR has inter-alia observed that the leasing of the Government land to the appellant is considered as supply of service as per sub-section (1) of section 7 of the Central Goods and Services Tax Act, 2017 and the Gujarat Goods and Services Tax Ac....
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....er Tariff Heading 9973, specifically under 997337 as Licensing services for the right to use minerals including its exploration and evaluation or as any other service? Ans. The activity undertaken by the applicant is classifiable under Heading 9973 (Leasing or rental services, with or without operator), as mentioned in the annexure at Serial No. 257 (Licensing services for the right to use minerals including its exploration and evaluation) sub-heading 997337 of Notification Number 11/2017-C.T. (Rate), dated 28-6-2017 (ii) What is rate of GST on given services provided by State of Gujarat to M/s Raj Quarry Works for which Royalty is being paid? Ans. The activity undertaken by the applicant attracts 18% GST (9% CGST+ 9% SGST). (iii) Whether services provided by the State Government is governed by applicability of Notification No 13/2017-CT(Rate), dated 28.06.2017 under entry number 5 and whether M/s Raj Quarry Works is taxable person in this case to discharge GST under reverse charge mechanism or whether given service is covered by exclusion clause number (1) of entry no 5 and State Government is liable to discharge GST on same? Ans. The applicant is not covered under exclu....
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....ntry (viia) relating to 'leasing or renting of goods' was inserted in the said Sl. No. 17 vide Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018 (effective from 01.01.2019) and the rate of tax for the residuary entry (viii) has been prescribed as 9% (9% CGST + 9% SGST). It is the submission of the appellant that prior to issuance of Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018, the rate of tax prescribed for the residuary entry [at Sl. No. 17 of Notification No. 11/2017-Central Tax (Rate)] was 'the rate of central tax as applicable on supply of like goods involving transfer of title in goods'. 6.3 The appellant has further submitted that it cannot be said that service in question in instant case viz. 'licensing service (by the Government of Gujarat) for the right to use minerals including its exploration & evaluation from the lease of land is covered within the services covered in entry at Sl. No. 35 of Notification No. 11/2017-Central Tax (Rate). The appellant has submitted that Entry at Sl. No. 17 - Heading 9973 (leasing or rental services, with or without operator) is the specific entry heading for the instant case and its residuary entry (viii) [whic....
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....al Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018. 6.7 As regards the reliance placed by the GAAR on the judgment of the Hon'ble Supreme Court in the case of WPIL Ltd. Vs. Commissioner of Central Excise, Meerut [2005 (181) ELT 359 (SC)], the appellant has submitted that all the three Notifications viz. Notification No. 31/2017-Central Tax (Rate), 1/2018-Central Tax (Rate) and 27/2018-Central Tax (Rate), are amending Notifications and not of clarificatory nature. It has been submitted that by virtue of these amending Notifications, new entries have been added to the existing notification. The appellant has relied upon the judgement of the Hon'ble Supreme Court in the case of MRF Ltd. Vs. Assistant Commissioner, Sales Tax [(2007) Taxman.com 1755 SC] and submitted that as held by the Hon'ble Supreme Court in the said judgement, unless it is expressly stated, amendment cannot be retrospective, but can only be prospective. 6.8 The appellant has requested (i) to quash and set aside advance ruling issued by the GAAR; (ii) to hold that the appellant's taxable receipt of service is covered within sub-entry (viii) of Sl. No. 17 of Notification No. 1/2017-Central Tax (Rate) as....
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....nt is required to pay Rs. 2,62,147/- per year or Royalty @ Rs. 250 per Metric Ton, whichever is higher to the Government of Gujarat. 12. In Notification No. 11/2017-Central Tax (Rate), it has been explained at clause (ii) of Para 4 that 'reference to "Chapter", "Section" or "Heading", wherever they occur, unless the context otherwise requires, shall mean respectively as "Chapter", "Section" and "Heading" in the annexed scheme of classification of services. The Annexure attached to the said Notification describes the "Scheme of Classification of Services". It is also pertinent to note that the "Scheme of Classification of Services" adopted for the purpose of Goods and Services Tax is in accordance with the United Nation's Central Product Classification (UNCPC) and Explanatory Notes. 13.1 In the "Scheme of Classification of Services", Heading 9973 covers "Leasing or rental services with or without operator". This Heading 9973 covers the following Groups - Group Services 99731 Leasing or rental services concerning machinery and equipment with or without operator 99732 Leasing or rental services concerning other goods 99733 Licensing services for the right to use intellect....
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....It is evident from the 'Scheme of Classification of Services', as discussed hereinabove that the Service Code (Tariff) 997337 includes 'licensing services for the right to use, mineral exploration and evaluation information, such as mineral exploration for petroleum, natural gas and non-petroleum deposits' whereas Service Code (Tariff) 999113 includes 'administrative services provided by government offices, bureau and programme units concerning discovery, exploitation, conservation, marketing and other aspects of mineral production, including the development and monitoring of regulations concerning prospecting. 15.2 At first blush, it would appear that the services received by the appellant from the Government of Gujarat, whereby the appellant is required to pay to the Government of Gujarat Royalty of Rs. 2,62,147/- per year or @ Rs. 250/- per Metric Ton of 'Black Trap' mined, whichever is higher, may equally merit classification under Service Code 997337 and Service Code 999113. However, on closer analysis, it is evident that the Service Code 999113 specifically covers the 'discovery, exploitation, conservation, marketing and other aspects of mineral production etc.', as against ....
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....ive services of the Government" (Group 99911) and more specifically as "Public administrative services related to the more efficient operation of business" (Service Code 999113), as against the Group covering "Licensing services for the right to use intellectual property and similar products" (Group 99733) inasmuch as permitting the appellant by the Government of Gujarat to extract the mineral (Black Trap) subject to certain conditions and on payment of Royalty is definitely a part of 'administrative services of the Government' and more specifically 'public administrative service related to the more efficient operation of business. Therefore, in our considered view, the service involved in the present case merit classification under Service Code 999113 as "Public administrative services related to the more efficient operation of business". 16.1 An issue may arise whether the 'Explanatory Notes to the Scheme of Classification of Services' can be referred and relied for classification of service under "Scheme of Classification of Services" attached to the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended. 16.2 In this regard, we observe that the Hon'ble Supre....
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.... and Services Tax as per Sl. No. 29 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended. 18. As we have already concluded that the service involved in this case is classifiable under Service Code 999113 as "Public administrative services related to the more efficient operation of business", we do not find it necessary to discuss various arguments put forth by the appellant in support of the contention that the said service is covered within residual sub-entry (vi) or (vii) or (viii) (as renumbered from time to time) of Sl. No. 17 of Notification No. 1/2017-Central Tax (Rate) pertaining to Heading 9973. Liability to pay Goods and Services Tax 19. The GAAR has held that as per Sl. No. 5 of Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017, in case of services supplied by the Central Government, State Government, Union Territory or local authority to a business entity, the liability to pay Goods and Services Tax shall be on the said business entity located in the taxable territory on reverse charge basis. Accordingly, the appellant is liable to pay Goods and Services Tax on aforesaid services received from the Government of Gujarat on reverse char....