2023 (1) TMI 632 - AAAR - GST
Classification of services - rate of GST - project management consultancy services - classifiable under SI No. 24(ii) of heading 9986 of the Rate Notification as Support services to exploration, mining or drilling of petroleum crude or natural gas or both under SAC 998621 and attracts GST @ 12% in terms of Si. No. 24(ii) of Rate Notification or classifiable under SI No. 21(ia) of heading 9983 of the Rate Notification as Other professional, technical and business services relating to exploration, mining or drilling of petroleum crude or natural gas or both and attracts GST @ 12% in terms of SI. No. 21 (ia) of Rate Notification?
HELD THAT:- On perusal of the meaning of the term “mining”, it is observed that, in common parlance, mining is construed as digging up of earth for extracting something valuables. It is further observed from the notification entry under SI. No. 24 (ii) that the phrase support services and the phrase mining of petroleum crude or natural gas or both have been connected with the word “to”, which has been interpreted and elaborated by the Appellant under their submissions made. In this regard, the Appellant have interpreted that the meaning of the term “to” should be construed as “towards” or “concerned”. Here also, we tend to agree with the interpretation and meaning drawn in respect of the word “to” on the basis of the dictionary meaning of the said word. Now, after having drawn the interpretation and meaning of the aforesaid words and phrases, we proceed to interpret the scope of the pertinent entry, i.e., entry under SI. No. 24 (ii) of the Rate Notification. On bare perusal of the said entry and on application of the fundamental principle of literal rule of interpretation, it is observed that the said entry covers only such activities or services which are used directly in the mining operations as understood by the dictionary meaning of the term “mining” which essentially entails the excavation of the land or sea to extract the valuable substances therefrom - it is the services provided by the EPC company who are undertaking the actual infrastructural work for increasing the production capacity of their client, VL, would be classified under the entry at SI. No. 24(ii) of the Rate Notification, and not the Project Management Consultancy services provided by the Appellant which are not directly concerned with the mining operation.
The services covered under the SAC 998341 are essentially related to the survey and exploration of the mineral deposits and the study of their properties, which is certainly not the case with the impugned services which are in the nature of project management and supervision, and hence the contention put forth by the Appellant are devoid of any merit and cannot be accepted. It is also pertinent to mention that the CBIC Circular No. 114/33/2019-GST dated October 11, 2019 clearly specified that the scope of the entry at Sr. No. 21 (ia) under heading 9983 of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 inserted with effect from 1st October 2019 vide Notification No. 20/2019- CT(R) dated 30.09 .2019 shall be governed by the explanatory notes to service codes 998341 and 998343 of the Scheme of Classification of Services. Thus, it is concluded that as per the explanatory note, the impugned services do not merit classification under SAC 998341.
The impugned services provided by the Appellant through their professionals are in the nature of professional and technical services as the said impugned services provided by them in deed require technically qualified and trained professionals and staffs. Thus, the impugned services provided by the Appellant will merit classification under SAC 998349 bearing description “Other technical and scientific services nowhere else classified, and accordingly merit entry at item (ii) of SI. No. 21 of the Rate Notification bearing the description Other professional; technical and business services other than (i) and (ia) above and serial number 38 below, attracting GST at the rate of 18% (CGST @9%+SGST @9%).