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TMI Blog2019 (11) TMI 479X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Tax (Rate) dated 31 12.2018, Minutes / Agenda / Proposal / Discussion of the GST council, we are of the view that amendments have been carried out vide the aforesaid notification to clarify the legislative intent as well as to resolve the unintended interpretations It is well settled that the legislative intent cannot be defeated by adopting interpretations which is clearly against such interpretations. Reliance placed in the decision of the Hon ble Supreme Court of India in the case of COLLECTOR OF CENTRAL EXCISE, SHILLONG VERSUS WOOD CRAFT PRODUCTS LTD. [ 1995 (3) TMI 93 - SUPREME COURT ], where in a 3 judges Bench of the Hon ble Court while interpreting amendments in Central Excise Tariff have held that the expression similar laminated wood in Heading No. 44.08 as it stood form the beginning must be construed to include within it block boards of all kinds so that the amendment in chapter Note 5 w.e.f. 19-3-19990 and thereafter w.e.f. 1-3-1992 merely clarified and made explicit that which was implicit in the heading throughout. These amendments were obviously made to end the dispute raised by the manufactures by an express statement - the ratio of the aforesaid case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the members did not agree on the issue of advance ruling on the rate of GST applicable to past supplies transacted during the period from 01 07.2017 to 31.12.2018 3.0. Views of the members of AAR 3.1. Member of AAR, the Joint Commissioner of Central Tax was of the view that the Appellant had filed application for advance ruling on 24.05.2019 on the issue of determination of Rate of GST, payable under Reverse Charge Mechanism, on royalty paid to Government for mining of Iron Ore for the period from July, 2017 to December, 2018 where as sub-section (2) of Section 97 prescribes that the question on which the advance ruling can be sought under this Act, which shall be in respect of - (1) Classification of any goods or services or both; (2) Applicability of a notification issued under the provisions of this Act and (3) Determination of time and value of supply of goods or services or both etc. In view of the above statutory provisions, it is obvious that Ruling should be issued in relation to any activity being undertaken or proposed to be undertaken in the future but not already undertaken in the past. Hence, he was of the view that the present case of the Applicant does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shall be the default rate of 9% CGST 9% OGST. 4.0 On reference by the Authority for Advance Ruling with differing observation by members the Applicant was granted an opportunity of personal hearing on 23 10 2019 Shri Vikram Khaitan. Chartered Accountant appeared on behalf of the Applicant In the course of personal hearing Mr Khaitan reiterated the submissions made in the application and also pleaded for issue of a ruling on the rate of GST applicable on the royalty paid to Government as consideration for the mining lease granted in favour of the Applicant At the time of hearing he filed copies of the following Advance Rulings issued by different Authorises of different States on the same question, i.e. ruling on the rate of GST applicable on mining lease service for consideration and precedence SI No. Case Law Name and Date State 1. M/s Aravalli Polyart Private Limited [RAJ/AAR/2018-19/34 dated 15.02.2019] = 2019 (3) TMI 929 - AUTHORITY FOR ADVANCE RULING, RAJASTHAN Rajasthan 2. M/s. NMDC Limited [STC/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Karnataka have also held that the rate of GST applicable for the period from 01 07.2017 to 31 12 2018 was the rate of GST applicable to the minerals AAR of Karnataka have also ruled that the rate of GST on the said service is 18% (9% CGST and 9% SGST) after 01 01 2019 Discussion Finding: 5.0. We have considered the submission of the Applicant filed along with the application and also in the course of personal hearing. The Applicant has requested to pass an order holding that the Rate of GST, payable by them under Reverse Charge Mechanism, on royalty paid to Government for mining of iron ore for the period July, 2017 to December, 2018 would be 5 % i.e. rate of GST applicable on supply of iron ore. We find that, as per the understanding of the Applicant, the mining lease service availed by them should be classified under the head 99733. They have also accepted their liability to pay GST on Royalty paid to the State Government under Reverse Charge Mechanism. They have simply sought for a ruling on the rate of GST on royalty paid to Government during the period from 01.07.2017 to 31.12.2018. 5.1. We find that in terms of Section 95 advance ruling means a decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4) 232 Heading 9973 Leasing or rental services without operator 233 Group 99731 Leasing or rental services concerning machinery and equipment without operator 234 997311 Leasing or rental services concerning transport equipments including containers, without operator 235 997312 Leasing or rental services concerning agricultural machinery and equipment without operator 236 997313 Leasing or rental services concerning construction machinery and equipment without operator 237 997314 Leasing or rental services concerning office machinery and equipment (except computers) without operator 238 997315 Leasing or rental services concerning compute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l films, sound recordings, radio and television programme and the like 253 997333 Licensing services for the right to reproduce original art works 254 997334 Licensing services for the right to reprint and copy manuscripts, books, journals and periodicals 255 997335 Licensing services for the right to use research and development products 256 997336 Licensing services for the right to use trademarks and franchises 257 997337 Licensing services for the right to use minerals including its exploration and evaluation 258 997338 Licensing services for right to use other natural resources including telecommunication spectrum 259 997339 Licensing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 28 06 2017 for the simple reason that there is no underlying goods in this case In this regard, we examine each of the Advance Rulings including the order passed by the Appellate Authority of Advance Ruling of the State of Rajasthan upholding the order passed by the AAR Rajasthan in the case of Aravali Polyart Private Limited [RAJ/AAAR/03/2019-20 dated 30 05.2019] = 2019 (8) TMI 1010 - APPELLATE AUTHORITY FOR ADVANCE RULING, RAJASTHAN We found that the AAR of Haryana and Chhattisgarh have issued express ruling holding that the rate of GST payable on mining lease service shall be rate applicable to the minerals i.e 5%. The AAR of Karnataka while issuing the ruling have held that the rate of GST applicable to mining lease service shall be the rate of tax applicable to the mineral i.e 5% up to 31 12 2018 and taxable at the rate of 18% (9% CGST and 9% SGST) The ruling issued by the AAR Rajasthan on the applicable rate of GST was different. They have ruled that the applicable rate of GST is 18% and that has been upheld by the Appellate Authority of Advance Ruling The said Appellate Authority upheld the ruling of AAR after thoroughly examining the recommendation of the 31st GS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -------------------------. Same rate of Central tax as on supply of like goods involving transfer of title in goods - (v) ------------------------------------ 2.5 ---------------- (vi) Leasing or rental services, with or without operator, other than (i), (ii), (iii), (iv) and (v) above Same rate of central tax as on supply of like goods involving transfer of title in goods - 5.3.3. The Central Government, on the recommendations of the Council made inter-alia the following amendments in the notification No 11/2017 - Central Tax (Rate), dated the 28-06-2017 vide notification no. 31/2017-Central Tax (Rate) dated 13.10.2017. (g) against serial number 17, for item (vi) in column (3) and the entries relating thereto in columns (3), (4) and (5), the following shall be substituted, namely:- (3) (4) (5) (vi) Leasing of motor vehicles purchased and leased prior to 1st July, 2017; --------------- - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds but rather leasing services for the right to use minerals including its exploration and evaluation , the transaction is appropriately covered under the residual entry of SI.No. 17 of the aforesaid notification. The aforesaid description of service received by the Applicant has subsequently been classified against item no. vii [From 13.10.2017 to 24.01.2018] and item no viii from 25.01.2018 onwards. The rate prescribed in the relevant notification against aforesaid item is same rate of central tax as applicable on supply of like goods involving transfer of title in goods till 31.12.2018 and 9 % thereafter. We also find that the GST rate so prescribed at Si.No. 17(vi) or at clause (vii) or (viii) after amendment is not implementable due to the absence of any underlying goods. 5.3.3.4 . On examining the Notification no. 27/2018-Central Tax (Rate) dated 31.12.2018 which has been issued on the recommendations of the GST Council to further amend the Notification no. 11/2017-Central Tax (Rate) dated 28.06.2017, we find that the same has been issued consequent upon decisions of the 31st GST Council meeting held on 22. 12. 2018. In this connection, for proper understanding o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refers to rights in intellectual property protected by the relevant IPR law in force, intellectual property not protected by IPR law in force cannot be termed as IPR. 2. The residuary entry for the Heading 9973, i.e. entry SI. No. 17(viii) prescribes GST rate as same rate of Central Tax as on supply of like goods involving transfer of title in goods . However, the intellectual property does not have underlying goods and thus the prescribed rate does not apply to transfer of intellectual property and similar products other than IPR. We have also gone through the minutes of the 31s1 GST Council Meeting held on 22nd December, 2018, where in, against the aforesaid proposal, it has been minuted as follows Annexure - II 14 41. The Council agreed to the proposals contained in S.Nos. 1 to 19 of Annexure II, recommended by Fitment Committee in its meeting of 14th and 15th December, 2018. 5.3.3.5. From the aforementioned proposal, it may be appreciated that amendment of Entry SI No. 17 (viii) was approved merely to clarify the GST rate applicable to the right to use Intellectual Property and similar products other than IPR which are covered und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 (SC)] = 1995 (3) TMI 93 - SUPREME COURT , where in a 3 judges Bench of the Hon ble Court while interpreting amendments in Central Excise Tariff have observed in Para 19 as follows To quote: In our opinion, the expression similar laminated wood in Heading No. 44.08 as it stood form the beginning must be construed to include within it block boards of all kinds so that the amendment in chapter Note 5 w.e.f. 19-3-19990 and thereafter w.e.f. 1-3-1992 merely clarified and made explicit that which was implicit in the heading throughout. These amendments were obviously made to end the dispute raised by the manufactures by an express statement. Un-quote We are of the view that the ratio of the aforesaid case is squarely applicable to the instant case as well. 7.0. We are also inclined to rely on the decision of the Hon ble Supreme Court of India in the case of W.P.I.L Ltd. Versus Commissioner of Central Excise, Meerut, U P [2005 (181) E.L.T. 359 (S.C)] = 2005 (2) TMI 137 - SUPREME COURT which is also applicable to the present case, where in a 3 Judges Bench of the Hon ble Supreme Court while interpreting applicability of exemption notifications have obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration and evaluation, as per Sr. No 257 of the annexure appended to Notfn No 11/2017-CT (Rate) dtd.28 06.2017 is included in group 99733 under heading 9973. Hence it attracts the same rate of tax as on supply of the like goods involving transfer of title in goods. The Applicant has also referred to Advance Ruling in the case of M/s NMDC limited, wherein the Chhattisgarh Authority for Advance Ruling held that The royalty paid by M/s NMDC in respect of mining lease is classifiable under sub heading 997337; Licensing services for the right to use minerals including its exploration and evaluation covered under entry no 17 of Notfn No 11/2017(Rate) dtd.28.06 2017 attracting GST at the rate as applicable for the supply of like goods involving transfer of title in goods, under reverse charge basis. 9.1. We are not inclined to follow the aforesaid rulings of AAR, since they have passed their rulings without properly appreciating the consequences of amendments made vide notification no 27/2018-Central Tax (Rate) dated 31.12.2018. The said rulings were passed without taking into cognizance, proposal and decision of GST council, consequent upon which the said notification was issued. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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