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2021 (9) TMI 1290 - AAAR - GSTClassification of services for which royalty paid - Rate of GST - to be classified under Tariff Heading 9973, specifically under 997337 as Licensing services for the right to use minerals including its exploration and evaluation or as any other service? - applicability of N/N. 11/2017-CT (Rate) dated 28.06.2017 read with annexure attached to it -Applicability of reverse charge mechanism - scope of exclusion clause number (1) of entry no 5 - HELD THAT:- Group 99733 covers “Licensing services for the right to use intellectual property and similar products” which is further sub-categorized to include licensing services for right to use several intangible properties e.g. right to use computer software, right to broadcast and show original films, sound recording, radio and television programme, right to reproduce original art works, right to reprint and copy manuscript, books, journals and periodicals, right to use research and development products, right to use trademarks and franchises, right to use minerals including its exploration and evaluation, right to use other natural resources including telecommunication spectrum and right to use intellectual property products etc. Looking from this angle also, the services received by the appellant from the Government of Gujarat, whereby the appellant is required to pay Royalty to the Government of Gujarat by calculating an amount per Metric Ton of ‘Black Trap’ mined or a fixed amount per year, whichever is higher, also merit classification under “Administrative services of the Government” (Group 99911) and more specifically as “Public administrative services related to the more efficient operation of business” (Service Code 999113), as against the Group covering “Licensing services for the right to use intellectual property and similar products” (Group 99733) inasmuch as permitting the appellant by the Government of Gujarat to extract the mineral (Black Trap) subject to certain conditions and on payment of Royalty is definitely a part of ‘administrative services of the Government’ and more specifically ‘public administrative service related to the more efficient operation of business. Thus, the service involved in the present case merit classification under Service Code 999113 as “Public administrative services related to the more efficient operation of business”. Whether the ‘Explanatory Notes to the Scheme of Classification of Services’ can be referred and relied for classification of service under “Scheme of Classification of Services” attached to the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended? - HELD THAT:- Though the aforesaid judgement of the Hon’ble Supreme Court in LML LTD. VERSUS COMMISSIONER OF CUSTOMS [2010 (9) TMI 12 - SUPREME COURT] is in respect of reliance to be placed on the HSN Explanatory Notes while interpreting the Central Excise Tariff and the Customs Tariff, the ratio laid down therein is equally applicable for interpreting the “Scheme of Classification of Services” attached to the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 inasmuch as the said “Scheme of Classification of Services” adopted for the purpose of Goods and Services Tax is in accordance with the United Nation’s Central Product Classification (UNCPC) and Explanatory Notes. Applicable Rate of Goods and Services Tax - HELD THAT:- As the service involved in this case is classifiable under Service Code 999113 as “Public administrative services related to the more efficient operation of business”, it is not deemed necessary to discuss various arguments put forth by the appellant in support of the contention that the said service is covered within residual sub-entry (vi) or (vii) or (viii) (as renumbered from time to time) of Sl. No. 17 of Notification No. 1/2017-Central Tax (Rate) pertaining to Heading 9973. Liability to pay Goods and Services Tax - HELD THAT:- The appellant M/s. Raj Quarry Works is required to pay Goods and Services Tax as per Sl. No. 5 of Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017 on the aforesaid service received by the appellant from the Government of Gujarat, whereby the appellant is required to pay Royalty to the Government of Gujarat.
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