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2019 (8) TMI 1010 - AAAR - GSTClassification of services - Rate of GST - Royalty in relation to mining lease - Excess Royalty Collection Contracts (ERCC) - services provided by the State of Rajasthan to M/s. Aravali Polyart Private Limited for which royalty is being paid - classified under SAC 9973 specifically under 997337 as Licensing Sendees for the right to use minerals including its exploration and evaluation or as any other Sendee? - reverse charge mechanism - N/N. 11/2017-Central Tax (Rate) dated 28.06.2017 - challenge to AAR decision. HELD THAT:- The Service has been rightly classified under the Service Code 997337 [Licensing services for the right to use minerals including its exploration and evaluation (entry No. 257)] falling under the Group 99733 [Licensing Services for the right to use intellectual property and similar products (entry No. 250)] falling under the Heading 9973 [Leasing or rental services with or without operator (entry No. 232)]. Determination of the rate of tax on the impugned Service - HELD THAT:- The entry No. 17 of the Notification No. 11/2017 - Central Tax (Rate), deals with the Heading 9973 (Leasing or rental services with or without operator). Since the discussion under the agenda covers Group 99733, it is wholly applicable on the activity under consideration i.e. impugned Service. From perusal of point No. 1 of the Discussion, it is very much clear that the impugned Service is not classifiable under entry No. (iii) and (iv) of the Notification No. 11/2017- Central Tax (Rate). Perusal of point No. 2 of the Discussion makes it clear that the rate under pre-revised entry No. 8 does not apply to “Licensing services for the right to use intellectual property’ and similar products other than IPR”. Since the impugned Service is also the “Licensing services for the right to use intellectual property and similar products other than IPR”, the rate under pre-revised entry No. 8 is not applicable on it. Since the rate under newly created entry No. (viia) is same as that of pre-revised entry No. (viii), the impugned Service would not attract this rate and so would also not merit classification under the entry No. (viia). Even, the description of the Service under the entry No. (viia) i.e. “Leasing or renting of Goods” by no stretch of imagination covers the impugned Service i.e. “Licensing services for the right to use intellectual property and similar products other than IPR”. It is crystal clear that neither entry No. (iii) nor (iv) nor (viia) would cover the impugned Service. Point No. 2 ibid clearly mentions that for this Service (Licensing services for the right to use intellectual property’ and similar products other than IPR) ,the GST council has carved out a new entry No. (viii) with the Service description “Leasing or rental services, with or without operator, other than (i), (ii), (iii), (iv), (v), (vi), (vii) and (viia) above” with rate of tax as 18%. AAR ruling upheld - appeal dismissed.
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