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2020 (4) TMI 64 - AAR - GSTClassification of services - Permission to extract accessory minerals (sand, gravel boulders) on payament of fees - service provided by Garhwal Mandal Vikas Nigam (GMVN) - Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 - whether classified under Service Code (Tariff) 9973, specifically under 997337 as licensing services for the right to use minerals including its exploration and evaluation or as any other service under the said chapter? - Rate of GST for the period 01.07.2017 to 31.12.2018. Classification of service provided by GMVN - HELD THAT - Government of Uttarakhand had allotted specified areas to GMVN to extract accessory minerals (sand, gravel boulders) from the same and are required to pay prescribed fees to the Government of Uttarakhand for the said allotted work. GMVN further allotted the said work in particular specified area to the applicant and for that GMVN charging collecting consideration in the form of money from the applicant and GMVN is paying prescribed fees as royalty to the Uttarakhand Government from the said consideration - the services rendered by GMVN is covered under serial no. 257 of Annexure appended to Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as Licensing services for the right to use minerals including its exploration and evaluation having service code (tariff) 997337. Whether the said service classified under Service Code (Tariff 9973, specifically under 997337 as licensing services for the right to use minerals including its exploration and evaluation or as any other service under the said chapter? - HELD THAT - The services rendered by GMVN is covered under serial no. 257 of Annexure appended to Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as Licensing services for the right to use minerals including its exploration and evaluation having service code (tariff) 997337. Rate of GST for the period 01.07.2017 to 31.12.2018 on services provided by M/s. Garhwal Vikas Nigam to Shri Ajay Kumar Dabral for which royalty is being paid - HELD THAT - The description of service i.e. Licensing services for the right to use minerals including its exploration and evaluation , undertaken by the GMVN does not cover under serial no. 17 (i) to 17 (viia) of the said notification, therefore the service in question falls at residual entry (viii) of serial no. 17 of said Notification - the said entry was amended vide Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018 (applicable w.e.f 01.01.2019) which implies that the service in question provided during the period 01.07.2017 to 31.12.2018 attract GST at the same rate of central tax as on supply of like goods involving transfer of title in goods and w.e.f. 01.01.2019 the said service attract GST @ 18%. In the instant case goods involved are sand, gravel boulders and thus their classification and applicable rate of GST are as under - Sand - Chapter 2505 of Tariff Act - rate of GST @ 5%. Gravel - Chapter 2517 of Tariff Act - rate of GST @ 5%. Sonte Boulder - Chapter 25169020 of Tariff Act - rate of GST @ 5%. Since the transfer of title in goods attract GST @ 5%, therefore the supply of service in question also attract GST @ 5% during the period 01.07.2017 to 31.12.2018.
Issues Involved:
1. Classification of service provided by Garhwal Mandal Vikas Nigam (GMVN) to the applicant. 2. Whether the service is classified under Service Code (Tariff) 9973, specifically under 997337. 3. Rate of GST for the period 01.07.2017 to 31.12.2018 on services provided by GMVN to the applicant for which royalty is being paid. Detailed Analysis: Issue 1: Classification of Service Provided by GMVN The applicant sought an advance ruling on the classification of the service provided by GMVN in terms of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. GMVN has been allotted mineral areas in revenue rivers of Garhwal region to extract accessory minerals (sand, gravel, boulders) after paying the required fees and fulfilling administrative/legal formalities. GMVN further allots this work to the applicant and charges consideration in the form of money, from which GMVN pays the prescribed fees as royalty to the Uttarakhand Government. Issue 2: Service Classification under Service Code (Tariff) 9973 The services rendered by GMVN are covered under serial no. 257 of the Annexure appended to Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as "Licensing services for the right to use minerals including its exploration and evaluation," having service code (tariff) 997337. Issue 3: Rate of GST for the Period 01.07.2017 to 31.12.2018 The rate of GST for the services provided by GMVN to the applicant for which royalty is being paid is determined by Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 and its subsequent amendments. The relevant notification specifies that the service "Licensing services for the right to use minerals including its exploration and evaluation" falls under the residual entry (viii) of serial no. 17, which implies that the service attracts GST at the same rate as on the supply of like goods involving transfer of title in goods during the period 01.07.2017 to 31.12.2018. The goods involved (sand, gravel, and boulders) attract GST at 5%, thus the supply of service in question also attracts GST at 5% during the specified period. Order: 1. The services rendered by GMVN are covered under serial no. 257 of the Annexure appended to Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as "Licensing services for the right to use minerals including its exploration and evaluation." 2. The service "Licensing services for the right to use minerals including its exploration and evaluation" is classified under Service Code (Tariff) 997337. 3. The services rendered by GMVN to the applicant during the period 01.07.2017 to 31.12.2018 attract GST at the same rate as on the supply of like goods involving transfer of title in goods, i.e., 5%.
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