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TMI Blog2018 (9) TMI 1647X X X X Extracts X X X X X X X X Extracts X X X X ..... some instances such as license fee, which are regulatory in nature, the quid pro quo also is not essential. The Abhivahan Shulk(transit fee) is different from the Marg Sudharan Shulk (both of which are collected by the forest department under statute of State Government) in as much as the latter is collected for the upkeep and maintenance of roads within the forest area and the same is collected from all the vehicles, whether loaded or empty. Thus the Marg Sudharan Shulk is used for the benefit of public in general who may use the roads of the forest area and not only to a particular class of people who are paying the said fee. The rates of Abhivahan Shulk, on the other hand, are fixed on the quantity of forest produce being transported. A vehicle entering a forest area will have to pay the Marg Sudharan Shulk even if it comes out empty. But the same empty vehicle will not be required to pay any Abhivahan Shulk, if it is coming out of the forest area without any forest produce. Thus, this fee is directly related to the quality and quantity of the forest produce. Abhivahan Shulk fulfills all the criteria, which are required to be established for a government levy, for it to be term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nistry, Government of India. 1.2. After having gone through the merits of the applicability of GST on "Marg Sudharan Shulk", which was being charged and collected by applicant for the maintenance of forest road, from non government, private and commercial vehicles engaged in mining work in lieu of use of forest road, the Advance Ruling Authority while holding that Under GST, "the services by way of access to a road or a bridge on payment of toll charges" were included in the list of exempted services, ruled that no GST was leviable on 'Marg Sudharan Shulk'. 1.3. GST on "AbhivahanShulk": The Advance ruling authority found that the said "Abhivahan Shulk" is charged and collected by applicant in respect of forest produce carried out by a person. Ongoing through "The Uttrakhand Transit of Timber and Other Forest Produce Rules 2012", the authority observed that a person who desires to obtain forest produce is required to be registered with the forest department after paying applicable fee and the said "Abhivahan Shulk" is charged on the basis of quantum and quality of forest produce and the said forest produce must be accompanied with a transit pass issued by forest authorities in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h passes and for the payment of fees therefore" 4. That THE UTTARAKHAND TRANSIT OF TIMBER AND OTHER FOREST PRODUCE RULES' 2012, have been formulated to implement the provisions of Indian Forest Act' 1927 and Chapter II of the said Rules deal with "Transit of Timber and other Forest Produce by Land" and Rule 3 which pertains to "Regulation of Transit of Forest Produce by Means of Permit", provides that "No forest produce shall be moved into, or from, or within the State of Uttarakhand except as hereinafter provided, without a transit pass in the form Schedule "A" to these rules......".Further Rule 5 which deals with "Fee Payable for Different classes of Passes" prescribes the system of issuance of passes and fee payable for the same. 5. Thus, in terms of the above, it stands well established that the Abhivahan Shulk (Transit Fee) is charged under Authority of Law and not for provision of any service. 6. That for determination that a particular sum received is exigible to GST or not, first of all the definition of Service needs to be considered. The same as per Section 2(102) stands as : "services means anything other than goods, money and securities but includes activities relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices therefore the same is not applicable. Further the relevant schedules I, II & III also nowhere stipulate that any Govt. Fee collected under a specific statue shall also be covered in the definition of service. 8. That in terms of the submissions made, the Abhivahan Shulk (Transit Fee) is not exigible to GST and in case such fee is held to be exigible to GST, in such a scenario all Govt. Fees and Levies charged under their specific statues shall become exigible to GST, which is not the intention of legislature, therefore it was prayed that Abhivahan Shulk (Transit Fee) may not be considered exigible to GST. That without prejudice to the submissions made hereinabove, it was further pleaded that if it was deemed that the Abhivahan Shulk (Transit Fee) charged by the appellant is for rendering service and is exigible to GST, the provisions of Notification No. 13/2017-CT(R) dated 28.06.2017 shall continue to apply and in terms of entry S.No. 5, GST, if any applicable, on the said Abhivahan Shulk (Transit Fee), shall be payable by the recipient of service under Reverse Charge and not appellant as held by the Authority for Advance Ruling by orders dated 20.04.2018, since the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t shall be regulated by the relevant conditions of sale and terms of the corresponding agreement deed executed by the buyer c. Further transfer of forest produce as may be exempted by the Government from the operation of these rules by notification in the official Gazette. Q4. What is the rate and methodology of collection of this fee? Is there any prescribed tariff? If yes, copy may please be submitted. Ans 4. That the fee is payable in terms of Rule 5 of THE UTTARAKHAND TRANSIT OF TIMBER AND OTHER FOREST PRODUCE RULES'2012. A copy of the same has already been submitted during the course of personal hearing. Q5. Under what accounting head is the fee deposited? Ans 5. The Fee is Deposited with State Govt. as Govt. Revenue under Code - 0406- 01- 800- 01- 03. A copy of sample challan is enclosed herewith as Annexure-I. Q6. What is the reason for imposition of this fee? How is the gross collection used and by which authority? Ans 6. The fee is charged in terms of the authorities granted under the Indian Forest Act' 1927, which has been enacted to "consolidate the law relating to forests, the transit of forest-produce and the duty leviable on timber and other forest-produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Authority on Advance Ruling dated 20.04.2018, appeal submissions, oral as well as written, by the appellant and relevant records. The main issues of contention, on taxability of Abhivahan Shulk, raised by the appellant against the Advance Ruling order inter alia, are- (i) that there is nothing in the definition which stipulates that even Govt. Fee collected under a specific statue shall also be covered in the definition of service. (ii) that Govt fee is not covered under scope of service as detailed in Section 7 (a) & (b). (iii) that in case such fee is held exigible to GST then in such a scenario all Govt. Fees and levies charged under specific statutes shall become exigible to GST, which is not the intention of the legislature; (iv) that the provisions of Notification No. 13/2017-CT(R) dated 28.06.2017 shall continue to apply and the same shall be payable by the recipient of service under Reverse Charge mechanism. Further the recipient of service shall also be entitled to benefit of exemption as contained in Entry S.No. 9 of notification no. 12/2017 CT(R) dated 28.06.2017 Before going into the specific details of the issue, the nature of the levy needs to be understo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a fee is for payment of a specific benefit or privilege although the special advantage is secondary to the primary purpose of regulation in public interest, if the element of revenue for general purpose of the State predominates the levy becomes a tax. In regard to fee, there is, and must always be, correlation between the fee collected and the service intended to be rendered. In determining whether a levy is a fee, the true test must be whether its primary and essential purpose is to render specific services to a specified area or class; it may be of no consequence that the State may ultimately and indirectly be benefited by it. The power of any legislature to levy a fee is conditioned by the fact that it must be "by and large" a quid pro quo for the services rendered. However, co-relationship between the levy and the services rendered/expected is one of general character and not of mathematical exactitude. All that is necessary is that there should be a "reasonable relationship" between the levy of the fee and the services rendered. There is no generic difference between a tax and a fee. Both are compulsory exactions of money by public authorities. Compulsion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncurring expenses in maintaining the administrative machinery for collection of the Abhivahan Shulk and they are required, by the Uttarakhand Transit of Timber and Other Forest Produce Rules 2012, to construct and maintain depots. All these expenses appear to be met up from the collection in the form of Abhivahan Shulk and the fact that this fee is deposited in the consolidated general head does not in any way change its character of being a fee. In return for this fee, the forest department is providing the service of maintaining and regulating the forest produce and ensuring the continued availability of the forest produce and its safe transit through the jurisdiction of forest department. These services are restricted only to the persons who are carrying the forest produce and have paid the Abhivahan Shulk. Thus, only a particular class of people, who are registered with the forest department and paying the said fee, in terms of THE UTTARAKHAND TRANSIT OF TIMBER AND OTHER FOREST PRODUCE RULES' 2012, enjoy these services. In view of the above findings, Abhivahan Shulk fUIfiIIS all the criteria, as laid down by different pronouncements of Hon'ble Supreme Court, which are required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otwithstanding anything contained in sub-section (1),-- (a) activities or transactions specified in Schedule III; or (b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services. (3) Subject to the provisions of sub-sections (1), and (2), the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as- (a) a supply of goods and not as a supply of services; or (b) a supply of services and not as a supply of goods. A plain reading of the above statute clearly shows that sub-clause (2) is the exclusion clause and only goods or service falling under the Schedule III (clause a) or being included in any exception notification (clause b), will not be treated as supply of goods or supply of services. Everything and anything other than those covered by sub clause (2) (a) & (b) are to be treated as supply of goods or supply of services as covered by Schedule I or Schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X
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