TMI Blog2019 (8) TMI 1010X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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. Leasin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paying GST on their supply at the rate of 5%. 5. The mining lease is governed by the Rajasthan Minor Mineral Concession Rules, 2017. In accordance with Rule 28 of the Rajasthan Minor Mineral Concession Rules, 2017, for the lease right awarded to the Appellant, they are required to pay royalty or dead rent as specified therein. 6. The State Government, for the purpose of collection of Royalty on given minerals, has awarded Excess Royalty Collection Contracts (ERCC) wherein one M/s. Shivganga Minerals Private Limited has been appointed for collection of Royalty from the Appellant in relation to mining lease. 7. In light of above, the Applicant/Appellant had filed an application dated 13.03.2019 for Advance Ruling before the Rajasthan Authority for Advance Ruling, GST, Jaipur seeking a Ruling on the following question: Question-1 : What is the classification of Service provided in accordance with Notification No 11/2017-Central Tax (Rate) dated 28.06.2017, read with Annexure attached to it, by the State of Rajasthan to M/s. Aravali Polyart Private Limited for which royalty is being paid ? Whether said Service can be classified under SAC 9973 specifically under 9973 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of minerals extracted or removed. In Hingir Rampur Coal Co. Ltd. v. State of Orissa [1961 (2) SCR 537] = 1960 (11) TMI 115 - SUPREME COURT , Justice Wanchoo stated that right to receive royalty is a mineral right. (iii) In the case of the India Cement Ltd., etc. v. State of Tamil Nadu, etc. (AIR 1990 SC 85) = 1989 (10) TMI 53 - SUPREME COURT , the Hon ble Supreme Court has held that Royalty is payable on a proportion of the minerals extracted and it has relationship to mining as also to the mineral won from the mine under a contract by which Royalty is payable on the quantity of the mineral extracted. (iv) Following concept of Royalty has been explained by the Indian Bureau of Mines, Nagpur:- A lessee is a person who is granted mineral concessions. The lessee is required to pay a certain amount in respect of the mineral extracted in proportion to the quantity extracted. Such payment is called royalty. Royalty is calculated on the quantity of minerals extracted or removed. The owner of the land is called lessor. The lessor has a right to receive a royalty based on the production of minerals. The lessor i.e. State Governments are collecting royalty irrespective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... synopsis of the Case and tendered that the classification of the Services received by them should be under entry No. 17 (viia) ibid which is Leasing or renting of Goods and leviable to tax at the rate which is applicable on supply of minerals extracted i.e. 5%. He also cited Ruling dated 22.02.2019 given by the Authority for Advance Ruling, Chhattisgarh in the case of M/s. NMDC Limited, Chhattisgarh in their favour. Discussion and Findings 13. We have carefully gone through the Appeal papers filed by the Appellant, the Ruling of the AAR, Rajasthan as well as oral submissions made by the authorized representative(s) of the Appellant, at the time of Personal Hearing held on 08.05.2019. We find that the Appellant vide their Application dated 12.12.2018 had requested for Advance Ruling on :- Question-1 : What is the classification of service provided in accordance with Notification No 11/2017- Central Tax (Rate) dated 28.06.2017, read with Annexure attached to it, by the State of Rajasthan to M/s Aravali Polyart Private Limited for which royalty is being paid ? Whether said service can be classified under SAC 9973 specifically under 997337 as Licensing services fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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)]. Relevant portion of Scheme is being reproduced for ready reference :- Annexure: Scheme of Classification of Services S.No. Chapter, Section, Heading or Group Service Code (Tariff) Service Description (1) (2) (3) (4) 1. Chapter 99 All Services 174 Section 7 Financial and related services; real estate services; and rental and leasing services 232 Heading 9973 Leasing or rental services with or without operator 233 Group 99731 Leasing or rental services concerning machinery and equ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... linen 247 997326 Leasing or rental services concerning textiles, clothing and footwear 248 997327 Leasing or rental services concerning do-it-yourself machinery and equipment 249 997329 Leasing or rental services concerning other goods 250 Group 99733 Licensing services for the right to use intellectual property and similar products 251 997331 Licensing services for the right to use computer software and databases 252 997332 Licensing services for the right to broadcast and show original films, sound recordings, radio and television programme and the like 253 997333 Licensing services for the right to reproduce original art works ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Same rate of central tax as on supply of like goods involving transfer of title in goods - (v)--------------------- 2.5 Provided that---- (vi)--------------------- 65 % of the--------- - (vii)-------------------- 2.5 Provided that----- (viia) Leasing or renting of goods Same rate of central tax as applicable on supply of like goods involving transfer of title in goods - (viii) Leasing or rental services, with or without operator, other than (i), (ii), (iii), (iv), (v), (vi), (vii) and (viia) above 9 - 18. We find that the Appellant has laid its claim to the above entry Nos. (iii) or (iv) or (viia) for classification of the impugned Service while the AAR, Rajasthan has ruled in favour of the entry No. (viii). We find that the entry No. (iii) and (iv) were part of the original Notification No. 11/2017- Central Tax (Rate) while the above entry No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty and similar products other than IPR. IPR, as held in several decisions of the Tribunal and the Courts, refers to rights in intellectual property protected by the relevant IPR law in force. Intellectual property not protected by IPR law in force cannot be termed as IPR. 2. The residuary entry for the Heading 9973, i.e entry SI. No. 17(viii) prescribes GST rate as same rate of Central Tax as on supply of like goods involving transfer of title in goods . However, the intellectual property does not have underlying goods and thus the prescribed rate does not apply to transfer of intellectual property and similar products other than IPR. 19. 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 propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is classifiable in view of the aforesaid para-19. Further, as per Section 103 of the CGST Act, any Advance Ruling is binding on the Applicant who has sought it and on the concerned officer or the jurisdictional officer in respect of the Applicant. Accordingly AARs Ruling as cited above can t be relied upon in the present case of the Appellant. 21. We also find that the Appellant themselves are not sure as to where the impugned Service would merit classification under entry No. 17 ibid. They are just pursuing each and every entry under entry No. 17 which prescribes the minimum rate of tax. In the Application filed before the AAR, Rajasthan, they maintained that the Service merits classification either under sub-entry No. (iii) or (iv) or pre-revised entry No.(viii). They have no idea as to where exactly the service would go. During personal hearing before the AAR, Rajasthan, in view of the Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018, they submitted that the Service merits classification either under old entries Nos. (iii) or (iv) or under new entry No.(viia). They maintained the same position [i.e. classification under either sub-entry No. (iii) or (iv) or (viia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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