2020 (10) TMI 854 - AAAR - GST

Maintainability of appeal - Rectification of Mistake - Classification of services - Licensing services for Right to use minerals including its exploration and evaluation or not - royalty paid in respect of Mining Lease - Classified under the heading 9973 attracting GST or not? - statutory contributions made to District Mineral Foundation (DMF) and National Mineral Exploration Trust (NMET) as per MMDR Act, 1957 - Supply or not - Doctrine of Merger. HELD THAT - Even in cases where a rectification of mistake application is admitted and a mistake apparent on record is corrected, the original order is not set aside. The original order remains on record and only the mistakes are corrected therein. The principle of doctrine of merger will not apply in such cases. Any appeal can be made only against the original order which will be read together with the correction made in the rectification order. In this case, the rectification application was not admitted as there was no error apparent on record and hence, the original order stands without any changes. The ROM rejection order does not merge with the original advance ruling order. The original advance ruling stands without any corrections. The appeal should have been filed by the Appellant against the advance ruling order dated 21-09-2019 within the period of 30 days from the date of communication of the said order. In the instant appeal, the Appellant is aggrieved by the entire ruling pronounced by the lower Authority - This Appellate Authority being a creature of the statue is empowered to condone a delay of only a period of 30 days after the expiry of the initial time period for filing appeal. We are not empowered to condone any delay beyond what the statute permits us. Appeal against ROM is not maintainable in as much as the impugned order is not an appealable order under Section 100 of the CGST Act, 2017 - the ROM rejection order dated 23-03-2020 does not merge with the original advance ruling dated 21-09-2019.

Summary

Issues Involved
1. Classification of royalty paid in respect of Mining Lease under GST.
2. Taxability of statutory contributions made to District Mineral Foundation (DMF) and National Mineral Exploration Trust (NMET) under GST.
3. Admissibility of the appeal against the rejection of the Rectification of Mistake (ROM) application.

Detailed Analysis

1. Classification of Royalty Paid in Respect of Mining Lease Under GST
The Appellant sought clarification on whether the royalty paid for a mining lease can be classified as "Licensing services for Right to use minerals including its exploration and evaluation" under heading 9973, attracting GST at the same rate as applicable on the supply of like goods involving the transfer of title in goods. The Authority for Advance Ruling (AAR) ruled that the royalty paid is part of the consideration for licensing services and is taxable at the rate applicable on the supply of like goods involving transfer of title in goods up to 31.12.2018 and at 9% CGST and 9% SGST from 01.01.2019 under the residual entries of Serial No. 17 of Notification No.11/2017-Central Tax dated 28.06.2017.

2. Taxability of Statutory Contributions to DMF and NMET Under GST
The Appellant also questioned whether statutory contributions to DMF and NMET amount to "Supply" and whether they are liable for GST under reverse charge. The AAR ruled that these contributions are part of the consideration for licensing services for the right to use minerals, including exploration and evaluation, and are therefore taxable. The supply includes royalty, DMF, and NMET contributions, and the liability to pay tax is on the recipient of such services under the reverse charge mechanism as per Serial No. 5 of Notification No.13/2017-Central Tax dated 28.06.2017.

3. Admissibility of the Appeal Against the Rejection of the ROM Application
The Appellant filed an application for rectification of mistake (ROM) in the advance ruling order, arguing that the AAR did not rule on whether contributions to DMF and NMET amount to supply under Section 7 of the CGST Act and that the payments were considered as a single transaction instead of two different transactions. The ROM application was rejected by the AAR, stating no error/mistake was apparent on record. The Appellant then filed an appeal against this rejection.

The Appellate Authority examined whether the appeal against the ROM rejection order is maintainable. According to Section 100 of the CGST Act, an appeal can be made against an advance ruling pronounced under Section 98(4) of the Act. The ROM rejection order does not merge with the original advance ruling, and the appeal should have been filed against the original advance ruling within the statutory period of 30 days. The Appellate Authority held that the appeal against the ROM rejection order is not maintainable, as it is not an appealable order under Section 100 of the CGST Act. The statutory time limit for filing an appeal against the original advance ruling had expired, and the Appellate Authority is not empowered to condone any delay beyond what the statute permits.

Conclusion
The appeal filed by the Appellant was dismissed on the grounds that it is not maintainable. The ROM rejection order does not merge with the original advance ruling, and the appeal should have been filed against the original advance ruling within the statutory period. The Appellate Authority does not have the power to condone delays beyond the statutory limits.