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2023 (7) TMI 519 - AUTHORITY FOR ADVANCE RULING, KERALAExemption from GST - Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution - determination of supplier of service and the recipient of service in the transaction between the Government and the applicant - reverse charge mechanism. Petitioner claims that they are making payment to the Government for using this property and hence the payment should be treated as payment to the Government for using such rights. Therefore, they can claim benefit under Entry No. 3 of Notification No. 12/2017 CT (Rate) dated 28.06.2017. Supplier and recipient of service - HELD THAT:- On analysis of the terms and conditions of the contract with reference to the definition of the terms; consideration, recipient of service and supplier of service; it is evident that the transaction covered by the subject contract between the applicant and the Government in sum and substance confers the right to the applicant to extract the mud and sand lying underneath the reservoir of Mangalam Dam and appropriate the same by way of sale or otherwise during the term of the contract for a lumpsum consideration of Rs. 15 Crores payable in instalments spread over the contract period. Therefore, in the subject transaction the supplier of service is the Irrigation Department of the Government of Kerala and the recipient of service is the applicant. Classification and rate of GST of the service - HELD THAT:- The grant of the right to desilt the reservoir and to extract the sand and mud therein falls within the scope of; licensing services for the right to use minerals including its exploration and evaluation' as described in Heading 997337 of the Scheme of Classification of Services under GST - the service is appropriately classifiable under SAC 997337 and attracts GST at the rate of 18% as per entry at SI. No. 17 (viii) of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017. Person who is liable to pay the tax; whether the supplier of service under forward charge or the recipient of service under reverse charge? - HELD THAT:- In the instant case the applicant is the recipient of service supplied by the Irrigation Department of the Government of Kerala. As per entry at SI. No. 5 of Notification No. 13/2017 Central Tax (Rate) dated 28.06.2017 the tax in respect of services supplied by the Central Government, State Government, Union territory or local authority to a business entity shall be paid by the business entity located in the taxable territory on reverse charge basis. Therefore, the applicant is liable to pay the GST on reverse charge basis on the consideration of Rs. 15 Crores given to the State Government for grant of the right to desilt the dam and extract the sand and mud lying underneath for appropriation.
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