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2019 (3) TMI 1848 - AAR - GSTClassification of service - service provided in accordance with Notification No. 11/2017-CT (Rate) dated 28.06.2017 read with annexure attached to it, by the State of Haryana to M/s. Quality Earth Minerals Pvt. Ltd., for which royalty is being paid - Whether said service can be classified under 9973 specifically under 997337 as Licensing services for the right to use minerals including its exploration and evaluation or as any other service? - rate of GST on given services provided by State of Haryana to M/s. Quality Earth Minerals Pvt. Ltd., for which royalty is being paid. HELD THAT - The term services has been defined under Section 2(102). services means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged - That in exercise of power conferred under Section 9(1) of the CGST Act 2017, Notification No. 11/2017-CT (Rate) dated 28.06.2017 has been issued which notifies the central tax, on intra-state supplies of service description along with Tariff Heading in accordance with the scheme of classification is specified which are subject to specific conditions. The services for the right to use minerals including its exploration and evaluation, as per Serial No. 257 of the annexure appended to Notification No. 11/2017-CT (Rate), dated 28.06.2017 is included in group 99733 under Heading 9973. The royalty/dead rent paid/payable to the Government by the applicant is consideration against the transfer of right to use minerals including its exploration and evaluation as per the lease granted by the Government to the applicant. Rate of GST on given services provided by State of Haryana to M/s. Quality Earth Minerals Pvt. Ltd. for which royalty is being paid - HELD THAT - The services for the right to use minerals including its exploration and evaluation, as per Serial No. 257 of the annexure appended to Notification No. 11/2017-CT (Rate), dated 28.06.2017 is included in group 99733 under heading 9973 and is covered under Serial No. 17(viii). Accordingly, as per Notification No. 11/2017-CT (Rate) as amended vide Notification No. 27/2018-CT (Rate) dated 31.12.2018 and made effective from 01.01.2019, rate of GST on given services provided by State of Haryana to M/s. Quality Earth Minerals Pvt. Ltd., for which royalty is being paid is 18%.
Issues:
Classification of service provided by the State of Haryana to the applicant for which royalty is being paid under Notification No. 11/2017-CT (Rate) dated 28.06.2017. Rate of GST on the services provided by the State of Haryana to the applicant for which royalty is being paid. Classification of Service: The applicant, engaged in mining, sought clarification on the nature of service provided by the State Government of Haryana and the applicable GST rate. The applicant argued that the royalty paid is for the right to use minerals granted under the lease. The authority analyzed relevant provisions such as Section 9 of the CGST Act 2017 and Notification No. 11/2017-CT (Rate). It was determined that the service falls under group 99733, specifically under 997337 for "Licensing services for the right to use minerals including its exploration and evaluation." Therefore, the royalty paid constitutes consideration for the transfer of the right to use minerals. Rate of GST: Regarding the rate of GST on the services provided, the authority examined the amended Notification No. 11/2017-CT (Rate) dated 28.06.2017, effective from 01.01.2019. It was found that the service in question does not fall under leasing or renting of goods but under "licensing services for the right to use minerals." As a result, it was classified under the residual entry at Serial No. 17 (viii) of Heading 9973. Consequently, the applicable GST rate for the services provided by the State of Haryana to the applicant, for which royalty is paid, was determined to be 18% (9% CGST + 9% SGST). Conclusion: The advance ruling concluded that the services provided by the State of Haryana to the applicant, involving the right to use minerals, are classified under group 99733 and are subject to an 18% GST rate. The ruling provided clarity on the classification and applicable tax rate for the services in question, based on the provisions of the CGST Act and relevant notifications.
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