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TMI Blog2021 (3) TMI 643X X X X Extracts X X X X X X X X Extracts X X X X ..... vice i.e. Licensing service for the right to use minerals including exploration and evolution, wherein the Government of Uttar Pradesh is supplier and the applicant is recipient. The liability of payment of GST liability on the amount of royalty paid to the Government is on the Service recipient i.e. the applicant in the instant case, in terms of Sl. No. 5 of Notification No. 13/2017 -Central Tax (Rate) dated 28-06-2017. Classification of service - HELD THAT:- The Applicant has been awarded with a lease of the area specified in the lease agreement and conferred the right to extract the minerals lying underneath for appropriation. The right so conferred is not limited to using the minerals over the lease period but rather to appropriate the minerals extracted during the lease period Of course, extraction of minerals and the Government, does not continue to enjoy title over the minerals extracted by the lessee. Rather the applicant enjoys the title over the minerals extracted from the lease hold area and accordingly appropriates the property in the minerals by way of sale or otherwise - the impugned service received by the Applicant from the State Government merits classificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said service can be classified under Chapter number 9973 as Licensing services for the right to use minerals including its exploration and evolution or any other service under the said chapter. iii. What shall be the rate of GST on given services provided by the Government of Uttar Pradesh to M/s. Ajay Kumar Singh for which royalty is being paid. 4). As per declaration given by the applicant in Form ARA-01, the issue raised by the applicant is neither pending in any proceedings nor decided in any proceedings in the applicant's case, under any of the provisions of the ACT. 5). The application for advance ruling was forwarded to the Jurisdictional GST Officer to offer his comments/ views on the matter as well as to inform that whether any proceeding, on the questions raised in the application, under any of the provisions of the Act, is pending or decided in the applicant's case. The Divisional reply was received in this office vide letter C. No. V(30)517/Tech/Div.LKO_IV/BBK/Misc./2019 dated 06.03.2020, wherein it has been reported that the services for the right to use minerals (sand) including it's exploration and evolution, as per Sr. No. 257 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sification of any goods or service or both. We therefore, admit the application for consideration on merits. 9) We observe that the Government provides license to various companies for exploration of natural resources. For this, the licensee company is required to pay the consideration to the Government in the form of annual licensing fee, lease charge, royalty, dead rent etc. In the State of Uttar Pradesh the mining lease is governed by the U.P. Minor Minerals (Concession) Rules, 1963. Rule 13 of the said Rules deals with Security Deposit , Rule 21 deals Royalty and Rule 22 deals Dead Rent . This activity of payment of lease charge/ dead rent/ royalty is towards the supply of service i.e. Licensing service for the right to use minerals including exploration and evolution, wherein the Government of Uttar Pradesh is supplier and the applicant is recipient. The liability of payment of GST liability on the amount of royalty paid to the Government is on the Service recipient i.e. the applicant in the instant case, in terms of Sl. No. 5 of Notification No. 13/2017 -Central Tax (Rate) dated 28-06-2017. Table Sl.No. Category of Supply of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sale or otherwise. Thus, in such case of mining lease service granted by Government, on payment of royalty as applicable, there is transfer of right to exploit the minerals lying under the lease hold area and to appropriate the exploit. On examining the aforesaid nature of the service being received by the applicant vis-a-vis classification of service, the impugned service received by the Applicant from the State Government merits classification under the head Licensing services for the right to use minerals including its exploration and evaluation at Serial No. 257, Heading 9973, Group 99733. 11). Now coming to the third question as what shall be the rate of GST on given services provided by the Government of Uttar Pradesh to applicant for which royalty is being paid we observe that Sl. No. 17 Notification 11/2017-Central Tax (Rate) dated 28-06-2017 specify the rates for heading 9973, which is as under: Sl.No. Chapter, Section or Heading Description of Service Rate (per cent,) Condition (1) (2) (3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of motor vehicles purchased and leased prior to 1st July 2017; 65 per cent. of the rate of central tax as applicable on supply of like goods involving transfer of title in goods. Note :- Nothing contained in this entry shall apply on or after 1st July, 2020 - (vii) Leasing or rental services, with or without operator, other than (i), (ii), (iii), (iv), (v) and (vi) above. Same rate of central tax as applicable on supply of like goods involving transfer of title in goods - ; Further, as per Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018; the following amendment has been done, (e) against serial number 17, for item (viii) in column (3) and the entries relating thereto in columns (3), (4) and (5), the following shall be substituted, namely: - (3) (4) (5) (viia) Leasing or renting of goods Same rate of central tax as applicable on supply of like goods involving transfer of title in goods - (viii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e intellectual property and similar products . However, the rate notification No. 11/2017-CT (R) dated 28.06.2017, prescribes rate only for transfer or permitting the use or enjoyment of Intellectual Property Rights (IPR) No rate has been prescribed for transfer of intellectual property and similar products other than IPR. IPR, as held in several decisions of the Tribunal and the Courts, 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 also observe that as per the minutes of the 31st GST Council Meeting held on 22nd December, 2018, against the aforesaid proposal, it has been observed that:- Annexure -II 14 41. The Council agreed to the proposals contained in S.N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. RAJ/ AAR/ 2018-19/34 dated 15.02.2019, in the case of M/s. Aravali Polyart (P) Ltd., has ordered that the the activity undertaken by the applicant attracts 18% GST (9% CGST + 9% SGST). Further the said order has been upheld by the Rajasthan Appellate Authority for Advance Ruling, vide Order No. RAJ/AAAR/03/2019-20 dated 30.05.2019. 16). Similarly in the case of M/s. Penguin Trading And Agencies Limited, the Appellate Authority for Advance Ruling, Odisha, in its Order No. 03/ODISHA-AAAR/2019-20 dated 05.11.2019 has ordered that . ...the licensing services for the right to use minerals including its exploration and evaluation received by the applicant is taxable @ 18% (9% CGST and 9% SGST) during 07/2017 to 12/2018... 17). We also observe that the Commissioner, SGST, Uttar Pradesh, vide their letter No. G.S.T./2017-18/ 1718091/Commercial Tax dated 15.02.2018, has also clarified that the rate of GST on the royalty received by the State Government would be at the rate of 18%. 18). In view of the above discussions, we, both the members unanimously rule as under; RULING 19). The advance Ruling on question posed before the Authority is answered as unde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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