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2019 (11) TMI 479

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..... 018-Central Tax (Rate) dated 31 12.2018, Minutes / Agenda / Proposal / Discussion of the GST council, we are of the view that amendments have been carried out vide the aforesaid notification to clarify the legislative intent as well as to resolve the unintended interpretations It is well settled that the legislative intent cannot be defeated by adopting interpretations which is clearly against such interpretations. Reliance placed in the decision of the Hon’ble Supreme Court of India in the case of COLLECTOR OF CENTRAL EXCISE, SHILLONG VERSUS WOOD CRAFT PRODUCTS LTD. [1995 (3) TMI 93 - SUPREME COURT], where in a ‘3’ judges Bench of the Hon’ble Court while interpreting amendments in Central Excise Tariff have held that the expression “similar laminated wood” in Heading No. 44.08 as it stood form the beginning must be construed to include within it block boards of all kinds so that the amendment in chapter Note 5 w.e.f. 19-3-19990 and thereafter w.e.f. 1-3-1992 merely clarified and made explicit that which was implicit in the heading throughout. These amendments were obviously made to end the dispute raised by the manufactures by an express stateme .....

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..... e members did not agree on the issue of advance ruling on the rate of GST applicable to past supplies transacted during the period from 01 07.2017 to 31.12.2018 3.0. Views of the members of AAR 3.1. Member of AAR, the Joint Commissioner of Central Tax was of the view that the Appellant had filed application for advance ruling on 24.05.2019 on the issue of determination of Rate of GST, payable under Reverse Charge Mechanism, on royalty paid to Government for mining of Iron Ore for the period from July, 2017 to December, 2018 where as sub-section (2) of Section 97 prescribes that the question on which the advance ruling can be sought under this Act, which shall be in respect of - (1) Classification of any goods or services or both; (2) Applicability of a notification issued under the provisions of this Act and (3) Determination of time and value of supply of goods or services or both etc. In view of the above statutory provisions, it is obvious that Ruling should be issued in relation to any activity being undertaken or proposed to be undertaken in the future but not already undertaken in the past. Hence, he was of the view that the present case of the Applicant does not come within .....

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..... ult rate of 9% CGST & 9% OGST. 4.0 On reference by the Authority for Advance Ruling with differing observation by members the Applicant was granted an opportunity of personal hearing on 23 10 2019 Shri Vikram Khaitan. Chartered Accountant appeared on behalf of the Applicant In the course of personal hearing Mr Khaitan reiterated the submissions made in the application and also pleaded for issue of a ruling on the rate of GST applicable on the royalty paid to Government as consideration for the mining lease granted in favour of the Applicant At the time of hearing he filed copies of the following Advance Rulings issued by different Authorises of different States on the same question, i.e. ruling on the rate of GST applicable on mining lease service for consideration and precedence SI No. Case Law Name and Date State 1. M/s Aravalli Polyart Private Limited [RAJ/AAR/2018-19/34 dated 15.02.2019] = 2019 (3) TMI 929 - AUTHORITY FOR ADVANCE RULING, RAJASTHAN Rajasthan 2. M/s. NMDC Limited [STC/AAR/09/2018 dated 22.02.2019] = 2019 (4) TMI 1449 - AUTHORITY FOR ADVANCE RULINGS, CHHATTISGARH Chhattisgarh 3. M/s. Wolkem Industries Limited [RAJ/AAR//2018-19/39 dated 25.03.2019 = 2019 (4) TM .....

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..... ernment for mining of iron ore for the period July, 2017 to December, 2018 would be 5 % i.e. rate of GST applicable on supply of iron ore. We find that, as per the understanding of the Applicant, the mining lease service availed by them should be classified under the head 99733. They have also accepted their liability to pay GST on Royalty paid to the State Government under Reverse Charge Mechanism. They have simply sought for a ruling on the rate of GST on royalty paid to Government during the period from 01.07.2017 to 31.12.2018. 5.1. We find that in terms of Section 95 advance ruling means a decision provided by the Authority or the Appellate Authority to an Applicant on matters or on questions specified in sub-section (2) of Section 97 or Sub-section (1) of section 100, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the Applicant. In terms of Section 97 (2) of CGST/OGST Act, the question on which the advance ruling can be sought under the said Act inter-alia includes classification of any goods or services or both, applicability of a notification issued under provisions of the Act and determination of the liability to pay .....

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..... rvices concerning other machinery and equipments without operator 241 Group 99732 Leasing or rental services concerning other goods 242 997321 Leasing or rental services concerning televisions, radios, video cassette recorders, projectors, audio systems and related equipment and accessories (home entertainment equipment ) 243 997322 Leasing or rental services concerning video tapes and disks (home entertainment equipment ) 244 997323 Leasing or rental services concerning furniture and other household appliances 245 997324 Leasing or rental services concerning pleasure and leisure equipment 246 997325 Leasing or rental services concerning household 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 progr .....

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..... ule that the impugned service received by the Applicant from the State Government merits classification under the head 997337 in the category of service description Licensing services for the right to use minerals including its exploration and evaluation . On the other hand, we do not agree with the ruling issued by the AAR Haryana and AAR Chhattisgarh that the rate of GST on such services shall be the rate of GST applicable to the supply of minerals i.e. iron ore in this case in terms of the residual entry in Entry Serial No. 17 of the rate Notification No 11/2017 dated 28 06 2017 for the simple reason that there is no underlying goods in this case In this regard, we examine each of the Advance Rulings including the order passed by the Appellate Authority of Advance Ruling of the State of Rajasthan upholding the order passed by the AAR Rajasthan in the case of Aravali Polyart Private Limited [RAJ/AAAR/03/2019-20 dated 30 05.2019] = 2019 (8) TMI 1010 - APPELLATE AUTHORITY FOR ADVANCE RULING, RAJASTHAN We found that the AAR of Haryana and Chhattisgarh have issued express ruling holding that the rate of GST payable on mining lease service shall be rate applicable to the minerals i.e .....

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..... r rental services, with or without operator) (i) ................................ 6 - (ii) - 9 - (iii) - Same rate of Central tax as on supply of like goods involving transfer of title in goods - (iv) -. Same rate of Central tax as on supply of like goods involving transfer of title in goods - (v) - 2.5 - (vi) Leasing or rental services, with or without operator, other than (i), (ii), (iii), (iv) and (v) above Same rate of central tax as on supply of like goods involving transfer of title in goods - 5.3.3. The Central Government, on the recommendations of the Council made inter-alia the following amendments in the notification No 11/2017 - Central Tax (Rate), dated the 28-06-2017 vide notification no. 31/2017-Central Tax (Rate) dated 13.10.2017. (g) against serial number 17, for item (vi) in column (3) and the entries relating thereto in columns (3), (4) and (5), the following shall be substituted, namely:- (3) (4) (5) (vi) Leasing of motor vehicles purchased and leased prior to 1st July, 2017; - (vii) Leasing or rental services, with or without operator, other than (i), (ii), (iii), (iv), (v) and (vi) above. Same rate of central tax as applicable on supply of like goods involving .....

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..... No. 17(vi) or at clause (vii) or (viii) after amendment is not implementable due to the absence of any underlying goods. 5.3.3.4. On examining the Notification no. 27/2018-Central Tax (Rate) dated 31.12.2018 which has been issued on the recommendations of the GST Council to further amend the Notification no. 11/2017-Central Tax (Rate) dated 28.06.2017, we find that the same has been issued consequent upon decisions of the 31st GST Council meeting held on 22. 12. 2018. In this connection, for proper understanding of the issue, we have gone through the Agenda for 31st GST Council Meeting. proposals recommended by Fitment Committee and Minutes of the Meeting of the Council available in GST council website. Si.No 18 of Annexure - II of Agenda item 6 , which is relevant to the issue, is reproduced below. SI. No Proposal Comments 18 To clarify the GST rate applicable on right to use Intellectual property and similar products other than IPR recommendation: It is proposed that to bring clarify the residuary rate entry for Heading 9973 in Notification no. 11/2017-Central Tax (Rate) dated 28.06.2017 may be split in two parts as follows. Description of Service Rate (per cent) Description of S .....

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..... , the impugned service received by the Applicant is appropriately covered under description Licensing services for the right to use minerals including its exploration and evaluation which is classifiable under SAC 997337 under Group 99733 But, as per discussion in point no 1 no rate has been prescribed for transfer of intellectual property and similar products other than IPR and in discussion Point No 2 it has also been made clear that GST rale Same rate of Central Tax as on supply of like goods involving transfer of title in goods does not apply to transfer of intellectual property and similar products other than IPR, since the intellectual property does not have underlying goods. 5.3.3.6. The underlying principle behind the above referred agenda item is transfer of intellectual property and similar products other than IPR is not like lease and rental of goods in which case, title over the goods always remains with the lessor and the lessee merely enjoys the right to use the goods during the lease period Thus, the rate of GST applicable on lease of goods may have been prescribed as the rate of GST applicable to supply of like goods involving transfer of title over the goods, but t .....

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..... ng V. Wood Craft Products ltd., ((1995) 3 SCC 454] = 1995) 3 SCC 454. In that case, this Court held that a clarificatory notification would take effect retrospectively Such a notification merely clarified the position and makes explicit what was implicit. Clarificatory notifications have been issued to end the dispute between the parties. 16. In view of the consistent policy of the Government of exempting parts of power driven pumps utilized by the factory within the factory premises, it could not be said that while issuing Notification No 46/94 of March 1, 1994, the exemption in respect of said item which was operative was either withdrawn or revoked. The action was taken only with a view to rescinding several notifications and by issuing a composite notification. The policy remained it was and in view of demand being made by the Department, a representation was made by the industries and on being satisfied the Central Government issued a clarificatory Notification No. 95/94 on April 25, 1994. It was not a new notification granting exemption for the first time in respect of parts of power driven pumps to be used in the factory for manufacture of pumps but clarified the position an .....

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