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2024 (7) TMI 1148 - AAAR - GSTLevy of GST or exempt from GST - amount paid to the Forest department as Abhivahan permission shulk - Scope of continuous supply of service u/s 2 (33) of the CGST Act 2017. Whether the amount paid to the Forest Department as Abhivahan Permission Shulk is liable to be taxed under GST or exempt as per SI. No. 4 and 5 of the Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017? - HELD THAT - The Abhivahan Shulk as collected by the Chhattisgarh Forest Department from the appellant is in lieu of granting permission for movement of Forest produce viz. coal from the forest area of Chhattisgarh state. The permit charges collected by forest department is used by (he forest officials keep a watch on the mining activity and also to assess the quantity and type of mineral being quarried to carry out survey and also keep constant watch on the movement of the produce, and is not related to Urban forestry, protection of the environment and promotion of the ecological aspect or Social forestry or farm forestry . Therefore, Abhivahan Shulk has neither any connection with Urban forestry, protection of the environment and promotion of the ecological aspect functions entrusted and as specified under SI. No. 8 to municipalities in the Eleventh Schedule read with Article 243W oi the Constitution of India nor with Social forestry and farm forestry functions entrusted and as specified under SI No 6 to Panchayats in the twelfth Schedule read with Article 243G of the Constitution of India - the said Abhivahan permission shulk paid by the appellant is not eligible for NII. rate of GST, as provided under SI No. 4 5 of Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017. Whether each transaction of Abhivahan Shulk, being less than Rs. 5000/- per transaction, is exempt under SI. No. 9 of the Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017, as it is not covered by the definition of continuous supply of service u/s 2 (33) of the CGST Act 2017? - HELD THAT - The appellant is a power generating company. The main raw material for generation of power is coal. The coal mines are situated in a forest area, and the appellant is paying Transit Fees or Abhivahan Shulk throughout the year on recurring basis to the Forest Department for issuance of transit pass whenever the Coal is cleared from the forest area, This is not a single transaction rather it's a supply of the entire coal regularly to their power plants from the said coal block located in the forest and for which permission is granted by the Forest department. It is just for administrative convenience that vehicle wise Abhivahan Permission Shulk or Transit Fee is being paid by the applicant to the Forest Department Therefore, the said service squarely falls under the category of supply of continuous service as per Section 2 (33) of CGST Act. 2017. The applicant is not eligible for exemption as provided under SI. No. 9 of Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017, as the Abhivahan Permission Shulk paid to the forest department is more than five thousand rupees in a financial year.
Issues Involved:
1. Whether the amount paid to the Forest Department as Abhivahan Permission Shulk is liable to be taxed under GST or exempt as per SI. No. 4 and 5 of the Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017. 2. Whether each transaction of Abhivahan Shulk, being less than Rs. 5000/- per transaction, is exempt under SI. No. 9 of the Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017, as it is not covered by the definition of continuous supply of service u/s 2 (33) of the CGST Act 2017. Issue-Wise Detailed Analysis: Issue 1: Taxability of Abhivahan Permission Shulk under GST The appellant, a power generation company, contended that the Abhivahan Permission Shulk paid to the Forest Department should be exempt from GST under SI. No. 4 and 5 of Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017. They argued that this fee is a pure service used for urban forestry, environmental protection, and ecological promotion, functions entrusted to Municipalities and Panchayats under Articles 243G and 243W of the Constitution. The relevant provisions of Notification No. 12/2017-Central Tax (Rate) were examined: - SI. No. 4 and 5 exempt services by the government related to functions entrusted to municipalities under Article 243W and Panchayats under Article 243G, respectively. The functions under Article 243G and 243W include social forestry, farm forestry, urban forestry, and environmental protection. However, the Abhivahan Shulk is a fee for granting permission for the transit of forest produce (coal) and is used by the Forest Department to monitor mining activities and the movement of forest produce, not for urban forestry or environmental protection. Thus, the Abhivahan Shulk does not fall under the functions listed in Articles 243G and 243W. Consequently, the appellant's contention that the Abhivahan Shulk is exempt from GST under SI. No. 4 and 5 of Notification No. 12/2017-Central Tax (Rate) was rejected. The fee is classified under residuary Heading 9997 for other services, attracting CGST @ 9% and CGGST @ 9% under reverse charge mechanism as per Serial No. 5 of Notification No. 13/2017-Central Tax (Rate), dated 28-6-2017. Issue 2: Exemption under SI. No. 9 of Notification No. 12/2017-Central Tax (Rate) The appellant argued that each transaction of Abhivahan Shulk is less than Rs. 5000/- and should be exempt under SI. No. 9 of Notification No. 12/2017-Central Tax (Rate). They claimed these transactions are not continuous supplies of service as defined under Section 2 (33) of the CGST Act 2017. Notification No. 12/2017-Central Tax (Rate) exempts services provided by the government where the consideration does not exceed Rs. 5000/-, unless it is a continuous supply of service. Section 2 (33) defines continuous supply of services as those provided continuously or recurrently under a contract for more than three months with periodic payment obligations. The appellant pays the Abhivahan Shulk regularly throughout the year for coal transit, making it a continuous service. Despite being charged per vehicle, the recurring nature of these payments for ongoing coal transit qualifies it as a continuous supply of service. Since the total Abhivahan Shulk paid exceeds Rs. 5000/- in a financial year, the exemption under SI. No. 9 of Notification No. 12/2017-Central Tax (Rate) does not apply. Therefore, the appellant is liable to pay GST on the Abhivahan Shulk. Rulings: 1. The amount paid by the appellant to the Forest Department as Abhivahan Permission Shulk is liable for GST at the applicable rate and is not eligible for a "Nil" rate of tax under SI. No. 4 and 5 of Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017. 2. The appellant is not eligible for a "Nil" rate of tax on the Abhivahan Shulk under SI. No. 9 of Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017.
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