TaxTMI 
TaxTMI 
2026 (7) TMI 437
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....state of Odisha vide GSTIN-21AAOCP2756K1Z5, office at Plot No. 191/A, Kharavela Nagar, Bhubaneswar, Odisha - 751001 and has sought advance ruling in respect of the following question: Q.1. Whether statutory deposits of Net Present Value (NPV), Compensatory Afforestation, Dwarf Plantation, Site Specific Wildlife Conservation plan, Plantation of Dwarf Species and various other charges as specified in detail at Table-1 at para 21 of statement of facts with Compensatory Afforestation Fund Management and Planning Authority, Government of Odisha / Gout of India ("CAMPA Fund") for obtaining forest clearance certificate is a "consideration" against "supply of services" under section 7 of the CGST Act and corresponding OGST Act? Q.2. Alternatively, If the answer to the question (A) is affirmative i.e. NPV being of the nature of consideration against supply of service, then whether same is exempted, vide entries at SI. Nos. 4 & 5 of Notification No. 12/2017-CT (Rate) dated.28.06.2017? Q.3. If the answer to the question (A) is affirmative and (B) is negative, whether such deposits will liable to Goods and Service Tax as forward charges or under reverse charge basis ....
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....o an existing OPTCL substation as a part of Eastern Region Expansion Scheme-XXXIV. 2.2 The Applicant, for purpose of construction of transmission lines and for the purpose of construction of project is required to clear forest land on which the electrical transmissions lines and electrical sub-stations will fall. 2.3 That Forest (Conservation) Act of 1980, stipulates that any diversion of forest land for development projects or other reasons must be approved by the Ministry of Environment, Forest & Climate Change, Govt. Of India (MoEF). Such approvals are known as 'forest clearances' and are conditionally issued by the MoEF 2.4 That as per the Forest (Conservation) Act 1980, whenever forest land is to be diverted for non-forestry purpose, the conditions relating to transfer, mutation and declaration as Reserve Forest / Protected Forest the equivalent non-forest land for compensatory afforestation and funds for raising compensatory afforestation etc. are imposed. 2.5 The process involved in the "forest clearance" are as follows. (a) Submission of Application: TPPTL is required to submit an application in the prescribed Form A along with Project Report, Map (Geo-....
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....Forest Clearance Certificate was sought from Ministry of Environment, Forest & Climate Change, Government of India. Accordingly, the Applicant have submitted the Application with relevant enclosers for forest clearance in PARIVESH Portal: https://parivesh.nic.in. 2.7 Further Honourable, Supreme Court in its order in the case of T.N. Godavarman Thirumulpad vs. Union of India and Others [Writ Petition (Civil) No. 202 of 1995], dated the 30th October, 2002, observed certain issue w.r.t compensatory afforestation related issues and NPV. .... that a Compensatory Afforestation Fund be created in which all the monies received from the user agencies towards compensatory afforestation, additional compensatory afforestation, penal compensatory afforestation, net present value of the diverted forest land or catchment area treatment plan shall be deposited;" 2.8 Hon'ble Supreme Court in the said judgement ordered that, apart from compensatory afforestation, the Net Present Value of forest land being diverted for non-forestry purposes should also be recovered from the user agencies. The money so recovered could be utilized for undertaking forest protection, other conservation mea....
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....y 23 of List III and the charge which is levied for that purpose would come under Entry 47 of List III. In that context, it was held levy of NPV is a fee that means every mining agency using and converting forest land to non-forest purpose has to pay a fee for continuing carrying on of the business. 2.12 It also provides for constitution of an authority at national level and at each of the State and Union territory for administration of the funds and to utilise the monies so collected for undertaking artificial regeneration (plantations), assisted natural regeneration, protection of forests, forest related infrastructure development, Green India Programme, wildlife protection and other related activities and for matters connected therewith or incidental thereto. 2.13 The State Compensatory Afforestation Fund Management and Planning Authority (CAMPA), Odisha was constituted on 14.08.2009 with the objective of Conservation, Protection, Regeneration & Management of existing natural Forests, Wildlife and their habitats & raising Site Specific Compensatory Afforestation, Penal Compensatory Afforestation, etc. with the utilization of funds deposited in Adhoc CAMPA towards Net Prese....
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....f Species and various other charges toward NPV, Compulsory Forestation etc to CMMPA Fund. (please refer Table at Para-21 below) 2.18 "Net Present Value" has been defined as the quantification of the environmental services provided for the forest area diverted for non-forestry uses, as may be determined by an expert committee appointed by the Central Government from time to time in this regard. NPV is paid by the user agencies for use of forest land for non-forest purpose and in other words, it can be said that NPV is paid for use of land i.e., renting or leasing charge paid for the using the immovable property. NPV is paid by the user agencies to compensate for the loss of tangible as well as intangible benefits flowing from the forest lands and accordingly, it can be said that it is a monetary contribution towards the state by the user agency. NPV is collected by the Government for providing environmental services by way of plantation, preservation of forest, ecology etc. 2.19 The Applicant submits the nature of payment required to be deposited under Odisha CAMPA (a) Compensatory Afforestation Value (CAV): It is the amount paid to the CAMPA fund to compensate for lo....
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....incurred by the State Forest Departments in executing, monitoring, and maintaining afforestation and conservation projects. FC Act read with CAF Act Evaluation management fee, cost for planting and maintenance of plants for 5 years and felling permission fee FC Act read with CAF Act 4. It is further submitted that the deposit of NPV and above charges / fee with CAMPA Fund are subsequently used by the forest department and other Govt. department for specific purposes under FC Act and CAF Act. 3.0 Submission of jurisdictional tax authority on Advance Ruling Application: The application was forwarded to the Jurisdictional Officer to submit admissibility of the Application and views on the questions raised by the applicant. The Jurisdictional Tax Authority vide letter dated 01.06.2026 has submitted their comments on the questions/issues raised in the application, which is furnished below: "CAMPA, which stands for Compensatory Afforestation Management and Planning Authority, has it's genesis in the Order of the Hon'ble Supreme Court of India in the case of T N Godhavarman vs. Union of India. The Hon'ble Supreme Court in it's order dated 30/10/2002 in the....
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....eed dispersal; From the above mentioned information, the following information can be inferred with respect to NPV. NPV is paid by the user agencies for use of forest land for non-forest purpose and in other words, it can be said that NPV is paid for use of land i.e. renting or leasing charge paid for the using the immovable property; NPV is paid by the user agencies to compensate for the loss of tangible as well as intangible benefits flowing from the forest lands and accordingly it can be said that it is a monetary contribution towards the state by the user agency. NPV is collected by the Government for providing environmental services and accordingly it can be said that Government will provide environmental services by way of plantation, preservation of forest, ecology etc; From the above discussed provisions, it is apparent that the Government of India is providing services to the Tax Payers and in lieu of providing services; the Government is collecting consideration in the form of NPV, which is deposited by the relevant Tax Payer in the CAMPA Fund. In other words, it can be said that the Government has agreed to supply the service ....
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....il, 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." From the above provisions, it can be seen that sub-section-2 of the Section 7 specifies what shall be treated neither as a supply of goods nor as Supply of services, are which as under: "(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" In this situation, it is observed that the services rendered by the Government to the Applicant does not fall either under (a) or (b) of the Section 7(2) of the GST Act and also the amount of NPV charged and collected as an obligation is a consideration although mandated by a law, which is administered, managed and regulated by the Forest Department, Government of Odisha. Further, it is also found that the amount of NPV received in the CAMPA Fund is utilized for u....
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....on but shall not include any subsidy given by the Central Government or a State Government; (b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government: Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply; As far as the present case is concerned, the amount of money (NPV) charged and collected by the Forest Department of Odisha is neither a subsidy given by the Central Government or a State Government nor a grant, but it is an consideration in the course of an obligation and in the course of furtherance of business. It is a settled principle of law that if grants are given freely in which the grantor does not receive any benefit in return, then it cannot be a consideration for any supply under GST law and are therefore outside the scope of GST. But, if the grantor....
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....Section or Heading of scheme of classification of services as specified in column (2), shall be levied at the rate as specified in the corresponding entry in column (4), subject to the conditions as specified in the corresponding entry in column (5) of the said Table:- Table SI.No. Chapter, Section or Heading Description of Service Rate (per cent.) Condition (1) (2) (3) (4) (5) 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 - Annexure: Scheme of classification of Service S.No Chapter, Section, Heading or Group Service Code (Tariff) Service Description 716 Group 99979 Other miscellaneous services 720 999794 Agreeing to tolerate an act 3.10. The liability to pay GST in respect of such services i.e. "toleration of an act" or any other services provided by the Government, except where specifically excluded, has always been on the business entity receiving the service i.e. under Reverse Charge Mechanism, as per SI No. 5 of the Notificat....
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....s where the supplier and the recipient of the supply are not related persons and the price is the sole consideration for the supply. Accordingly, in the instant case, it is the value of NPV paid by the Applicant to the CAMPA Fund. So far as the time of supply of such services of toleration of an act supplied by the Government to the applicant is concerned, they are liable to pay GST under RCM and thus the provisions of Section 13(3) of the GST Act is applicable. Section 13(3) of the GST Act is extracted hereunder for ease of reference:- (3) In case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply shall be the earlier of the following dates, namely;- (a) the date of payment as entered in the books of account of the recipient or the date on which the payment is debited in his bank account, whichever is earlier; or (b) the date immediately following sixty days from the date of issue of invoice or any other document, by whatever name called, in lieu thereof 2[by the supplier, in cases where invoice is required to be issued by the supplier; or]: Now coming to the issue raised by the ....
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....% on the amount of NPV paid to the Government in lieu of getting permission for use of forest land for non-forestry use." 4. Personal Hearing: The applicant had been given opportunities to hear personally before the Authorities on 15.04.2026 & 29.04.2026. During personal Hearing, Sri Niranjan Swain, Advocate, Authorized Representative & Ms. Aparna Joshi, Group Head, Indirect Tax appeared before the Authorities wherein the Authorized representatives led by Sri Niranjan Swain has reiterated the facts made in their written submission. 5.0 Discussion & findings This Authority has carefully examined the Advance Ruling application (GST ARA-01), the accompanying statement of facts, applicant's detailed legal submissions, and the written submissions placed on record. The primary dispute before us is whether the compulsory payment of Net Present Value (NPV), Compensatory Afforestation charges, and other associated environmental levies into the State Compensatory Afforestation Fund Management and Planning Authority ("CAMPA Fund") acts as a "consideration" for a "supply of service" rendered by the Government, thereby attracting liability to pay GST under forward charge or under th....
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.... (b) a supply of services and not as a supply of goods. From the above statute, for any activities to fall within the net of GST, two criteria must be satisfied simultaneously: 1. An activity amounting to a supply of goods or services must take place. 2. There must be a "consideration". In the present case, this authority finds that, Diversion of forest land for non-forest purposes is prohibited except with prior approval under Section 2 of the Forest (Conservation) Act, 1980. The state holds natural resources, including forest lands, in public trust. When a business entity requests the diversion of forest land for commercial transmission lines, the state evaluates the application and grants specific permission or a license to use that land for non-forestry purposes. It means without such approval a. the project cannot be executed; b. transmission lines cannot pass through forest land; and c. the applicant cannot legally use the forest area. Therefore, the applicant approaches the Government seeking a statutory permission and approval for use of forest land for a non-forest purpose. The approval granted by Government enables the applicant to undertake an o....
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....nducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; (b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government: Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply; The CAMPA payments made or to be made by the applicant are not voluntary. In fact, those payments are mandatory conditions imposed for obtaining forest clearance. Had the applicant not deposited NPV and other mandatory deposits: • approval would not be granted; and • forest land could not be diverted. Therefore, the payment is intrinsically linked with the grant of approval. The nexus between payment and permission is direct and undeniable. Hence the....
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....aches the Government seeking approval under the Forest (Conservation) Act, 1980 for use of forest land for non-forest purposes. The Government examines the proposal and grants permission subject to fulfilment of prescribed statutory conditions, including payment of NPV and other CAMPA-related charges. Thus, the service under consideration is therefore not a municipal function, nor a panchayat function, but a statutory regulatory function exercised under the Forest (Conservation) Act, 1980 and the Compensatory Afforestation Fund Act, 2016. The jurisdictional officer has also rightly pointed out that the exemption under Entry Nos. 4 and 5 is confined to activities in relation to constitutional functions under Articles 243G and 243W and that the Applicant does not satisfy the conditions prescribed therein. The Authority finds merit in the said submission. Accordingly, this Authority holds that the services supplied by Government by way of granting permission for diversion of forest land and permitting non-forest use thereof do not fall within the ambit of Entry Nos. 4 or 5 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. 5.4 Reverse Charge Liability: Having he....
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....el, transport of goods or passengers, or any other excluded category. This Authority further observes that forest land cannot be diverted by the Applicant as a matter of right. The Applicant obtains a valuable and legally enforceable permission from Government enabling it to execute its transmission project over forest land. Such permission directly facilitates the Applicant's commercial operations and business activities. The payment of NPV and other CAMPA charges is the statutory consideration required for obtaining such permission. The mere fact that the consideration is deposited into the CAMPA Fund rather than directly retained by a particular Government department does not alter the nature of the transaction. Under GST law, taxability is determined by examining the existence of a supply and the consideration paid in relation thereto. The subsequent destination, accounting treatment or utilization of the amount received is not determinative of taxability. Accordingly, once the transaction is held to be a taxable supply of service by Government to a business entity, the liability to discharge GST squarely falls upon the Applicant under Reverse Charge Mechanism in terms....