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TMI Blog2019 (1) TMI 1958X X X X Extracts X X X X X X X X Extracts X X X X ..... an a reference to the same provisions under the UKGST Act. Brief Facts of the Case The facts, in brief are - I. M/s Purewal Stone Crusher, Ramnagar (hereinafter referred as 'PSC') are registered in Uttarakhand with GSTIN No. 05AAPFP3357G1Z2. II. EGL made an application under Section 97 (1) of the CGST Act 2017 (hereinafter referred to as 'the act') on 15.06.2018, seeking an Advance Ruling on the following issues - (i) Nature of Road Usage Charges and Government Fee paid by the applicant in respect of following services- Head Description of activity Nature, Govt. Body Road Usage Charge Abhivahan Shulk Road usage charges paid to Govt. Tarai Paschim, Van Prabhag, Ramnagar Road Usage Charges Govt. Fee Fee for ambient air monitoring Pollution control expenses U.P.E.P.C. Board Khanij Sampada Shulk Mining charges Dist. Geology Mining Deptt. Motor Vehicle Tax Amt. Paid to state transport authority ARTO, Kashipore State Transport Deptt. (ii) Road usage charges and govt. Fees paid by the applicant to multiple govt. Deptts. [tabled in sl. (i) above] falls within the category of exempted govt. Services as mentioned under sl. Nos. 4,5,6,9,23 & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shwarya Sharma, Advocate, on behalf of M/s Purewal Stone Crusher, Ramnagar, Nainital. During the course of the personal hearing Shri Ashwarya Sharma reiterated the points covered in the grounds of appeal dated 24.10.201 He further explained that no GST is payable on-the penalty paid by him on the unaccounted River Bed Material as imposed by the District Magistrate. The same is not covered as supply in Section 7(1)(d) of the GST Act. He also cited various CBEC circulars of the service tax era as well as. GST provisions to buttress the point that the fines and penalties don't constitute supply of services. Even if held as supply, it is exempted under GST. Regarding Abhivahan Shulk, he stated that any amount paid as consideration less than Rs. 5,000/- is not charged to GST under Sl.No. 9 of Notification No. 12/2017. As regards the Khanij Sampada Shulk, the same is in the nature. of a tax and not a fee for service provided, there being no quid pro-quo. Hence, no GST is applicable. In light of the afore-said submissions he requested a Ruling in favour of the appellant. Discussion and Findings We have gone into the ruling of the AAR, the appeal memorandum and the submissions mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. No quid pro quo, which is an essential ingredient for 'service' as held by a catena of decisions of the Apex Court and also lower judicial forum, is present when a person pays penalty to a government or semi government agency. The penalty is imposed by such an agency in the course of imparting its sovereign responsibilities and it is not done for any commercial consideration or for furtherance of business. Penalty is different from `fees' collected by such agencies in as much as the agency is supposed to render certain specific service to a specific class of person in lieu of the fees. We do not agree with the findings and rulings of the AAR regarding penalty being a service under "agreeing to the obligation to refrain from an act, or to tolerate an ad or situation, or to do an act" category (TSH 9997- other services.). A plain reading of the description of the service shows that the first requirement is that there must be an 'agreement'. This service is applicable where there is a contract between two persons for completing a service and in case of failing to complete such service; the service provider is bound by the said contract to pay fine/penalty or de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of goods or services or both includes- (a) any payment made or to be made, whether in money or otherwise, in respect of in response to, or for the inducement of the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; (b) the monetary value of any act or forbearance, in respect of in response to, or for the inducement of the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government: Thus the amount of Rs. 19658100/- was paid by the appellant to the District Geology & Mining Department, Directorate of Industries, Govt. of Uttarakhand, and not to the District Magistrate (as claimed in the Appeal Memorandum). Further, this amount was demanded as royalty on 25530, cu. Mtrs. of RBM of unaccounted stock on which royalty due to the State had been evaded by. the appellant. The wordings of the demand notice of the DM were clear and unambiguous and there remains not even an iota of doubt about the nature of Rs. 19658100/- being royalty. Value of taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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