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TMI Blog2020 (11) TMI 1086X X X X Extracts X X X X X X X X Extracts X X X X ..... 97337 -Licensing services for the right to use minerals including its exploration and evaluation. The State Government has been providing the service of licensing services for the right to use minerals after its exploration end evaluation and for this a consideration has to be paid to the Government - Reverse Charge Mechanism is applicable for certain notified services as mentioned in Notification No. 13/2017 - Central Tax (Rate) dated 28.06.2017. As per Sl. No. 5 to the said Notification, services supplied by the Central Government, State Government, Union territory or local authority to a business entity attracts GST, under reverse charge basis by the recipient of such services. The applicability thereof of GST rate for the aforementioned service is to be based on the classification of service. In the instant case as the applicant is admittedly availing mining rights including it exploration and evaluation of soil used in earthwork on payment of a consideration to the Government of Chhattisgarh applicable with effect from 1.4.2018 GST is payable on reverse charge basis by the applicant on the consideration so paid to the Government, at the rate of supply of like goods being mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arila Station to 13/280 KM TM of NTPC Railway Siding, M/s KCC-MBBL (Joint Venture) (hereinafter referred to as the Main Contractor ) participated in above tender work and received the above contract work. The Main Contractor has awarded the above work on back to back basis to the Applicant with all the terms and conditions and specification of the original tender. All the purchases and execution of the above work is being done by the applicant M/s Shanti Enggicon Private Limited. 2.1 The Government of Chhattisgarh Mining Department vide Notification No. F7-29/2012/12 dtd. 05.03.2018 has imposed royally on Soil used in earthwork and also charged the royalty rate structures of certain minerals like aggregate, sand and mourm to be applicable form 01.04.2018. This notification has two impact, first there is change in rate of royalty of certain minerals and secondly imposition of new royalty on soil used in earthwork. The tender has been awarded prior to 01.04.2018, i.e. the date of notification of the Chhattisgarh State for imposition of Royalties on Earth/ Soil, whereby not only substantial enhancement in royalty of other minerals has been effected but also new royalties has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the responsibilities to complete the work and thus applicant paid the royalty to State Government from his bank account by selecting the Tax Payer name of Main Contractor (Since the tender is allotted to main contractor). All the cost for getting royalty clearance from the Mining office is borne by the applicant. In such a case, the project work is executed by the Applicant and also engaged in earthwork formation work. The applicant is also paying the royalty challan from its bank account and accordingly it was their contention that it will be deemed that it is the applicant who has received services from the Government and GST shall be paid under RCM by the applicant on such royalty charges, to be reimbursed by the main contractor. Section 15 of Central Goods and Service tax Act, 2017 provides that the value of supply Shall include any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act, the State Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act, if charged separately by the supplier. Thus it has also been the contention of the applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n No. 11/2017 - Central Tax (Rate) dated 28.06.2017, though the aforementioned service is not covered in any of the specifically mentioned descriptions of -entry no 17, resultantly it qualifies being categorized in the residual clause / serial number of entry no 17, wherein it has been specified that the rate applicable for such service should be of same rate as applicable for the supply of like goods involving transfer of title in goods. Annexure to Notification No. 11/2017 - Central Tax (Rate) dated 28.06.2017, prescribing therein the Service Accounting Code for each type of services, reads as under:- Heading 9973 Leasing or rental services with or without operator Group 99731 Leasing or rental services concerning machinery and equipment with or without operator Group 99732 Leasing or rental services concerning other goods Group 99733 Licensing services for the right to use intellectual property and similar products Here in the instant case, the services received by the applicant merits classification under 99733. Further the Group 99733 consists ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under sub-section (3) or sub-section (4) of section 9, or under sub-section (3) or subsection (4) of section 5 of the Integrated Goods and Services Tax Act; Further, Reverse Charge Mechanism is applicable for certain notified services as mentioned in Notification No. 13/2017 - Central Tax (Rate) dated 28.06.2017. As per Sl. No. 5 to the said Notification, services supplied by the Central Government, State Government, Union territory or local authority to a business entity attracts GST, under reverse charge basis by the recipient of such services. The applicability thereof of GST rate for the aforementioned service is to be based on the classification of service. In the present case, as discussed above the mining rights so granted is covered under the sub heading 997337 that specifies - 'Licensing services for the right to use minerals including its exploration and evaluation', covered under entry no. 17 of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 attracting the same rate as applicable for the supply of like goods involving transfer of title in goods. On perusal of the abovementioned provisions, it is evident that the business entities availing minin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the value of supply of Service as per Section 15 for payment of GST, considering the same as part of supply of value for supply of the aforesaid services / activity rendered by the applicant to the main contractor, we would like to refer to the provisions of Section 15 of CGST Act, 2017 which reads as under:- SECTION 15. Value of taxable supply. - (l) The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply. (2) The value of supply shall include - (a) any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act, the State Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act, if charged separately by the supplier: (b) any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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