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2020 (9) TMI 1253 - APPELLATE AUTHORITY FOR ADVANCE RULING, BIHARClassification of goods - Product Sand - to be classified under Tariff Heading 2505 or not - taxable at 5% or not - reverse charge mechanism - serial number 64 of notification number 12/2017 Central/State Tax (Rate), dated 28.06.2017 - HELD THAT:- Serial number 64 of the notification deals with assignment of right to use any natural resources. The instant case does not involve assignment of any right to use any natural resource. It is not in dispute that the Respondent engaged is in the business of exploiting sand from the river beds and that the right to explore for, exploit/extract sand is assigned by the Government for consideration, generally termed royalty. Upon extraction of the sand, the Respondent is free to sell it in the market. The Merriam Webster Dictionary defines the word “use” as “to do something with (an object, machine, person, method, etc.) in order to accomplish a task, do an activity, etc.”. The activity of the Respondent is no way involved with “using” the sand extracted by it to accomplish any activity or any task. In fact, the Respondent actually parts with the sand extracted by it rather than making any use of it. Once it is held that the activity in question does not fall within the scope of the said serial number 64, the claim for exemption made by the Respondent fails. The services provided by Government to the Respondent are classifiable under the heading 997337 viz. “licensing services for the right to use minerals including its exploration and evaluation” and that the rate of tax applicable to this activity is 18% with effect from 01.07.2017 itself - in the instant matter the services provided by the Government to the Respondent do not fall within the scope of serial number 64 of the impugned notification number 12/2017. The Respondent has all along been discharging his tax liability in the matter of the service under consideration in this matter, at the rate of 5% on reverse charge basis. This fact is significant since it indicates that for a considerable period of time since the implementation of GST, the Respondent has admitted that services provided by the Government to him in this matter are not exempt and hence do not fall within the ambit of the said serial number 64 of the impugned notification number 12/2017 (supra). Even his appeal before the Authority for Advance Ruling was limited to the issue of whether 5% was the rate applicable to the activity in question. There was no contention on behalf of the Respondent before the said Authority that the said activity was exempt from tax.
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