2019 (11) TMI 1364 - AAR - GST

Levy of GST - rate of GST - Extraction of Timber/ Bamboo in natural Forests - Transportation of Timber/ Bamboo from natural Forests to the Govt. Depots - Maintenance of Govt. Depots like classification/ grading of timber and bamboo and wages to Mastris for supervision - HELD THAT - What is a support service in relation to the above had been defined by means of an explanation to the same entry. And the explanation had employed the word 'mean' which is restrictive in nature. Thus what is given in explanation shall only mean as support services and nothing else shall. From the explanation given to the entry, the support services mentioned are only in relation to agriculture and fishery and animal husbandry. None of the services are mentioned in relation to natural forests. Moreover, agricultural produce and natural forest produce are entirely different and involve different processes starting form plantation to harvesting - Hence in the absence of any specific exemption to that effect, one cannot extend the services that are mentioned in relation to agriculture to those of natural forests. It is a settled law that an exemption or a relief provided in an enactment shall only be interpreted in the exact wording employed in the legislature. Nothing can be extrapolated or inferred to extend the scope of an exemption. Therefore, the service in question viz., a) cutting logging b) Transportation c) maintenance of depots of forest department cannot be covered under the said entry 24(i) - The transactions referred to are taxable at the rate of 9% CGST 9% SGST as per the general entry 35 of the notification no 11/2017 dt 28-06-2017.

Summary

Issues:
1. Applicability of GST on extraction and transportation of timber/bamboo.
2. Applicability of GST on maintenance of government depots.
3. Interpretation of the legal provisions by the applicant.

Analysis:
1. The applicant sought clarification on the applicability of GST on activities involving extraction and transportation of timber/bamboo from natural forests. The applicant highlighted that the work is labor-oriented and carried out under the supervision of Forest Department officials. The bills for these activities are paid based on minimum wage rates. The applicant questioned whether GST is applicable to these activities and requested clarification on the percentage and relevant HSN code under the GST Act. The Authority examined the issue and ruled that the transactions are taxable at 9% CGST + 9% SGST under entry 35 of the notification.

2. Another issue raised was regarding the maintenance of government depots, including classification, grading of timber/bamboo, and wages to mastris for supervision. The applicant inquired about the applicability of GST on these labor-oriented activities. The bills for these services are also paid based on minimum wage rates. The applicant sought clarification on the GST applicability, percentage, and relevant HSN code. The Authority analyzed the issue and concluded that these transactions are taxable at 9% CGST + 9% SGST under entry 35 of the notification.

3. The applicant interpreted the legal provisions, stating that the activities undertaken were not covered under the GST Act or any specific HSN codes. The applicant referred to the pre-GST era where VAT was not applicable to similar activities. Due to the ambiguity post-GST implementation, the applicant filed for an advance ruling seeking clarity on the GST applicability. The Authority reviewed the applicant's stance but ruled that the services provided fell under taxable categories as per the GST Act, attracting 9% CGST + 9% SGST. The ruling was based on the specific entry 35 of the notification issued in June 2017.