2020 (6) TMI 490 - AAR - GST

Classification of Works Contract - Applicability of SAC - whether classifiable under SAC 9973 - Leasing or rental services concerning machinery equipment with or without operator or SAC 9954 - Composite supply of Work contract services - difference between operator and manpower as per GST Provisions - Special Purpose Vehicles - whether classified as machinery or not. HELD THAT - The applicant is providing a support to M/s. AMP in extraction of mineral and therefore it is a kind of supplying support Service. Whereas the supply cannot be categorized as that of goods due to the fact that minerals and mining site both are under the ownership of M/S AMP throughout agreement and post-agreement too. The applicant is just facilitating/ supporting M/s. AMP in extraction of the mineral. Thus the activity undertaken by the applicant is a Service under CGST Act, 2017 - Whereas, the mineral extracted by the applicant from the mining site is no doubt a goods which is extracted from the land but since the applicant do not have any ownership of the said mineral and land before the agreement, in duration of agreement and post agreement, therefore the activity is just a service to M/s. AMP. The applicant is providing supporting service related to mining. The said service is classifiable under HSN 998622. The rate of GST on the said service is 18% as provided under the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 (as amended). The applicant is misconstruing the facts because nowhere in the agreement, M/s. AMP asks the applicant to lease manpower and vehicles. In fact, the supply of manpower and vehicles is for the own benefit of the applicant, these supplies are not made to M/s. AMP but to himself. Therefore, both these supplies cannot be categorized as independent supplies made to M/s. AMP. Scope of Advance Ruling Authority - Difference between operator and manpower as per GST Provisions - Special Purpose Vehicles - whether classified as machinery or not - HELD THAT - The issue raised by the applicant, are beyond the scope of this authority as it is not covered under section 97(2) of the CGST Act, 2017.

Summary

Issues Involved:
1. Classification of the work contract under GST.
2. Difference between operator and manpower as per GST provisions.
3. Classification of Special Purpose Vehicles as "Machinery" under GST.

Issue-wise Detailed Analysis:

1. Classification of the Work Contract under GST:
The applicant, M/s. KSC Buildcon Private Limited, entered into a contract for mining operations, including drilling, excavation, and transportation of green marble/serpentine. The applicant argued that the work should be classified under SAC 9954 as a composite supply of work contract services. However, the authority found that the applicant was providing support services to M/s. AMP Minerals Pvt. Ltd. for the extraction of minerals, which is classified under HSN 998622 as "Support Services to Mining." The rate of GST on this service is 18% (CGST 9% + SGST 9%) as per Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017.

2. Difference between Operator and Manpower as per GST Provisions:
The applicant sought clarification on the difference between operator and manpower under GST provisions. The authority found that the supply of manpower and vehicles was for the applicant's own benefit and not made to M/s. AMP. Hence, these supplies could not be categorized as independent supplies to M/s. AMP. The authority did not provide a ruling on this issue as it falls beyond the scope of Section 97(2) of the CGST Act, 2017.

3. Classification of Special Purpose Vehicles as "Machinery" under GST:
The applicant argued that the special purpose vehicles used in mining operations should not be categorized as "Machinery" under the GST Act. The authority found that the applicant misunderstood the facts, as the supply of vehicles and manpower was for the applicant's own use and not leased to M/s. AMP. Therefore, the classification of these vehicles as machinery was not relevant to the supply made to M/s. AMP. This issue was also beyond the scope of Section 97(2) of the CGST Act, 2017, and no ruling was given.

Conclusion:
The authority ruled that the work undertaken by the applicant is classified as "Support Service to Mining" under HSN 998622 and attracts GST at 18%. Questions regarding the difference between operator and manpower and the classification of special purpose vehicles as machinery were beyond the authority's mandate and no ruling was provided on these issues.