2022 (6) TMI 419

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....ng, the expression 'GST Act' would be a common reference to both CGST Act and TGST Act. 3. It is observed that the queries raised by the applicant fall within the ambit of Section 97 of the GST ACT. The Applicant enclosed copies of challans as proof of payment of Rs. 5,000/- for SGST and Rs. 5,000/- for CGST towards the fee for Advance Ruling The concerned jurisdictional officer also raised no objection to the admission of the application. The application is therefore, admitted 4. Brief facts of the case: M/s. Singareni Collieries Company Limited is entering into contracts with a host of vendors/suppliers for extraction of coal. The applicant is of the opinion that these contracts are for leasing or renting of goods and are desirous of ascertaining the rate of tax applicable to the royalty paid. Hence this application. 5. Questions raised: 1. Whether royalty paid in respect of Mining Lease can be classified under "Licensing services for the right to use minerals including its exploration and evaluation falling under the heading 9973 attracting GST at the same rate of tax as applicable on supply of like goods involving transfer of title in goods"? 2. Determination ....

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.... renting of goods Same rate of central tax as applicable on supply of like goods involving transfer of title in goods. - The moot question in the issue raised is whether lease of land for mining constitutes 'leasing or renting of goods' as argued by the applicant. The Hon'ble Supreme Court of India in the case of State of H.P & Ors Vs Gujrat Ambuja Cement Limited & Ors. (2005) 142 STC 1 in a (3) member Judge Order has held that "A mining lease is an interest in immovable property. The extraction and removal of minerals is essentially an extension of the enjoyment of immovable property. As noted in Titagarh Paper Mill's case (1985) 3 SCR 26, the right conferred by the lease deed to extract and remove the minerals is a 'profit a prendre'. The Hon'ble Supreme Court of India in this case cited certain paras in Halsbury's Laws of England (Fourth Edition) 2003 for elucidating the meaning and content of a mining lease. The same is reproduced as under: "Para 321: Nature of mining lease : A lease may be granted of land or any part of land, and since minerals are a part of the land it follows that a lease can be granted of the surface of the land and ....

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.... Para 324: Usual provisions in leases- The statutory formalities regarding the disposition of an interest in land will apply to a contract for a mining lease. In a contract for a lease for working a mine, time is of the essence of the contract even if not expressly stated to be so. Mining leases usually contain clauses providing for the reference of dispute to arbitration or determination by an expert where the value of the minerals gotten is in dispute." In the above case, the Hon'ble Apex Court relied on their judgment in D.K. Trivedi & Sons and Ors. v. State of Gujarat and Ors. MANU/SC/0636/1986 : [1986] 1 SCR 479 and held that their order in this case... "is a complete answer to the plea raised by learned counsel for the appellate-State. It was, inter alia, held in that case as follows: (The relevant paras are quoted). "39. In a mining lease the consideration usually moving from the lessee to the lessor is the rent for the area leased (often called surface rent), dead rent and royalty. Since the mining lease confers upon the lessee the right not merely to enjoy the property as under an ordinary lease but also to extract minerals from the land and t....

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....ent made towards minerals extracted in proportionate to the quantity so extracted. Therefore the contract for mining lease cannot be classified as 'Leasing or Renting of goods'. Further the CGST Act or rules made there under or Notifications issued do not create a legal fiction for mining to be classified as 'Leasing or Renting of goods'. At Serial no. 17 of the Notification No. 11/2017 chapter heading no. '9973' of SAC enumerates 'leasing or rental services without an operator'. This entry was modified by removing 'with' operator vide Notification No. 27/2018 dated: 31.12.2018. According to explanation to this notification any reference to chapter, section or heading shall be with respect to scheme of classification of services annexed to the notification. In this annexure, the service leasing or renting of goods is enumerated under group head '99732'. As against the above entry in the annexure to Notification No. 11/2017 the group head '99733' enumerates leasing services for right to use intellectual property and similar products. Under this group, the tariff item '997337' enumerates 'licensing services for the right to use minerals including its exploration and evaluation'....