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2019 (3) TMI 1849 - AAR - GSTClassification of services - 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. Sainik Mining And Allied Services 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 Sainik Mining and Allied Services 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 service in question is licensing services for right to use minerals and not leasing or renting of goods and thus is not covered under Sr. No.17 (viia). Therefore, it would fall under the residual entry at Sr. No. 17 (viii). Being so, the rate of tax applicable on such services, as provided therein, shall be 9% CGST and 9% SGST.
Issues involved:
Classification of service provided by the State of Haryana to the mining company for which royalty is paid under GST law, and determination of the applicable GST rate on the services. Analysis: 1. Factual Background: The applicant, a mining company, is engaged in mining boulders in Haryana under a lease agreement with the State Government. The applicant pays annual dead rent or royalty for the right to use minerals extracted. The applicant seeks clarification on the nature of service provided by the State Government and the applicable GST rate. 2. Record of Personal Hearing: During the hearing, the applicant argued that the royalty paid is for the right to use minerals, and thus falls under the category of licensing services for the right to use minerals. They highlighted the amendment in Notification No. 11/2017-CT (Rate) and its impact on the classification of services related to mining activities. 3. Discussion and finding of the authority: The Authority discussed the relevant provisions of the CGST Act, emphasizing the definition of services and the classification of services under Notification No. 11/2017-CT (Rate). The Authority analyzed the amendments in the notification and the specific entry related to leasing or rental services, concluding that the service provided by the State Government falls under the residual entry at Sr. No. 17 (viii) of the notification. 4. Advance ruling under section 98 of the CGST/HGST Act 2017: Based on the discussions and findings, the Authority issued an advance ruling on the classification of service provided by the State of Haryana to the mining company. The ruling clarified that the service falls under group 99733 under heading 9973, specifically under 997337 for licensing services for the right to use minerals. 5. Ruling on classification and GST rate: The Authority ruled that the service provided for the right to use minerals is classified under group 99733 under heading 9973 and is covered under Sr. No. 17(viii) of Notification No. 11/2017-CT (Rate). Consequently, the applicable GST rate on the service provided by the State of Haryana to the mining company is 18% (9% CGST + 9% SGST). In conclusion, the Authority provided a detailed analysis of the classification of services related to mining activities under the GST law and determined the applicable GST rate on such services based on the specific provisions and amendments in the relevant notifications.
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