2021 (6) TMI 1131 - AAR - GST

Levy of GST - pure services or not - Abhivahan Shulk collected by the Government of Chhattisgarh - applicability of reverse charge mechanism - Whether as each transaction is separate transaction and Abhivahan Shulk charged is always less than Rs 5000/- per transactions and is not covered by the definition of continuous supply of service u/s 2(33) of the CGST Act 2017 hence exempt under sl.no No 9 of the Notification No 12/2017? HELD THAT - The contention put forth by the applicant that the activity involved herein is in relation to a function entrusted to a State Government / Municipality under Article 243W of the Constitution is misplaced and not sustainable under law Accordingly it is held that the afore discussed activity of granting permission by the Forest Department of the State of Chhattisgarh and the said Abhivahan permission shuck paid for the same is not eligible for NIL rate of GST provided under Sr. no. 4 5 of Notification No. 1212017-Central/State Tax (Rate) dated 28-6-2017. The coal mined / raised in the said allotted mine located at Gore Palma Raigarh was for the intended purpose of utilization at the End Use Plant viz. Marwa Thermal Power Plant located at Marwa Janjgir Champa Chhattisgarh having configuration / capacity of 2 x 500 MW. It is further evident from the letter no. 04-02/Coal Block/GP-111/221 dated 22.5.2020 by the applicant available in public domain addressed inter-alia to the Department of Forest Government of Chhattisgarh citing reference to F.No. 8-91/2010-FC dated 18.4.2017 vide which lease has been transferred to CSPGCL. informed about the compliance status regarding the conditions of transfer of lease in respect of diversion of Forest land - The applicant s contention that each transaction is a separate transaction and Abhivahan Shulk charged is always less than Rs 5000/- per transaction and is not covered by the definition of continuous supply of service u/s 2(33) of the CGST Act 2017 hence exempt under sl.No. No 9 of the Notification No 12/2017 is not tenable in as much as the coal block has been allocated by virtue of the above cited allotment order dated 14.9.2015 for generation of power at their Marwa Thermal power plant and consequent to mining of coal from the coal blocks supra this coal mined are moved from Forest to their place of business and for this movement of coal a permission is granted by the Forest department of the Chhattisgarh Government and a transit fee is being paid by the applicant for the transit pass issued in this regard by the said Forest department of Chhattisgarh. On going through the contents at Sl.No. 9 of Notification no. 12/2017-Central/State Tax (Rate) dated 28-6-2017 claimed by the applicant that the exclusion clause mentions that nothing contained in this entry shall be applicable for transport of goods . It is worth notable that the said entry does not refer to any service relating to transport of goods rather it simply specifies only about non applicability of the said exemption in respect of transport of goods - In the case in hand it is ultimately for the movement / transport of coal from the allotted coal block located in a Forest place to the Thermal Power Plant permission is granted by the Forest Department of Chhattisgarh and for which the impugned Abhivahan permission shulk or transit fees is being paid by the applicant - the applicant is not eligible for exemption as provided under sr. no. 9 of Notification no. 12/2017-Central Tax (Rate) dated 28-6-2017 claimed by the applicant. There is no doubt as regards the fact that CSPGCL the applicant is a business entity and from the said entry at sr. no. 6 of Notification no. 12/2017-Central/State Tax (Rate) dated 28-6-2017 it becomes very evident that if any services including the three services excluded in clauses (a) to (c) are provided by the Central Government State Government or local authority to any business entity they would not be eligible for Nil rate of GST provided therein. The Abhivahan permission Shulk for the permission granted by the Forest Department merits classification under the residuary Heading 9997 for other services with the tax rate of CGST@ 9% and CGGST@ 9% and the applicant is liable for GST on the said Abhivahan permission Shulk under reverse charge basis in terms of Serial No. 5 of the Notification No. 13/2017-Central Tax (Rate) dated 28-6-2017 (as amended).

Summary

Issues Involved:
1. Applicability of GST on "Abhivahan Shulk" under the provisions of the reverse charge mechanism.
2. Exemption from GST for "Abhivahan Shulk" under Notification No. 12/2017.
3. Classification and tax rate applicable to "Abhivahan Shulk".

Detailed Analysis:

Issue 1: Applicability of GST on "Abhivahan Shulk" under the provisions of the reverse charge mechanism

The applicant, Chhattisgarh State Power Generation Company Limited (CSPGCL), sought an advance ruling on whether the "Abhivahan Shulk" paid to the Forest Department of Chhattisgarh is liable to GST under the reverse charge mechanism. The authority clarified that under Section 9(3) of the GST Act, the government may specify categories of supply of goods or services for which the tax shall be paid on a reverse charge basis by the recipient. Notification No. 13/2017 specifies that services supplied by the State Government to a business entity are subject to GST under the reverse charge mechanism. Since the Forest Department of Chhattisgarh is providing the service, CSPGCL, as the recipient, is liable to pay GST under the reverse charge mechanism.

Issue 2: Exemption from GST for "Abhivahan Shulk" under Notification No. 12/2017

CSPGCL argued that "Abhivahan Shulk" should be exempt from GST under clauses 4 and 5 of Notification No. 12/2017, as it is a pure service used for "Urban forestry, protection of the environment and promotion of the ecological aspect," functions entrusted to municipalities and panchayats under Articles 243G and 243W of the Constitution. However, the authority found this interpretation misplaced. The "Abhivahan Shulk" is a transit fee for the movement of forest produce (coal) through a forest area, not a service related to urban forestry or environmental protection. Therefore, it does not qualify for the exemptions under clauses 4 and 5 of Notification No. 12/2017.

Issue 3: Classification and tax rate applicable to "Abhivahan Shulk"

CSPGCL also contended that each transaction of "Abhivahan Shulk" is less than Rs. 5000 and should be exempt under Sl. No. 9 of Notification No. 12/2017. The authority rejected this argument, stating that the coal block allocation and subsequent coal movement are continuous activities, not separate transactions. The transit fee is a consideration for permission to transport coal, and the exemption under Sl. No. 9 does not apply to the transport of goods. The authority concluded that "Abhivahan Shulk" should be classified under Heading 9997 for other services, with a tax rate of CGST@ 9% and CGGST@ 9%. CSPGCL is liable for GST on "Abhivahan Shulk" under the reverse charge mechanism as per Serial No. 5 of Notification No. 13/2017.

Order:
1. The "Abhivahan Shulk" paid by CSPGCL to the Forest Department of Chhattisgarh is liable for GST at the applicable rate and is not eligible for the "Nil" rate under Sr. No. 4 and 5 of Notification No. 12/2017.
2. CSPGCL is not eligible for the "Nil" rate of tax on "Abhivahan Shulk" under Sl. No. 9 of Notification No. 12/2017.
3. "Abhivahan Shulk" merits classification under Heading 9997 for other services with a tax rate of CGST@ 9% and CGGST@ 9%, and CSPGCL is liable for GST under the reverse charge basis as per Serial No. 5 of Notification No. 13/2017.