TMI Blog2021 (9) TMI 1290X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial with the Government of Gujarat. The lease was granted by the Collector of Panchamahal in pursuance to lease agreement signed between the appellant and the Government of Gujarat. As per the lease agreement, the appellant is required to pay rent of ₹ 2,62,147/- per year or Royalty @ ₹ 250/- per Metric Ton, whichever is higher to the Government of Gujarat. 2. The appellant raised the following questions for advance ruling before the Gujarat Authority for Advance Ruling (herein after referred to as the GAAR ) :- (i) What is the classification of service provided in accordance with Notification No. 11/2017-CT (Rate) dated 28.06.2017 read with annexure attached to it, issued by the State Government to M/s Raj Quarry Works, for which royalty is being paid. Whether said service can 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? (ii) What is rate of GST on given services provided by State of Gujarat to M/s Raj Quarry Works for which Royalty is being paid? (iii) Whether services provided by the State Government is governed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the appellant, which is a business entity, therefore, the appellant is required to pay tax on the said supply under reverse charge mechanism as per Notification No. 13/2017-Central Tax (Rate). 4. In view of the foregoing, the GAAR vide Advance Ruling No. GUJ/GAAR/R/2020/09 dated 19.05.2020, has ruled as follows - (i) What is the classification of service provided in accordance with Notification 11/2017-CT (Rate) dated 28.06.2017 read with annexure attached to it, issued by the State Government to M/s Raj Quarry Works, for which royalty is being paid. Whether said service can 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? Ans . The activity undertaken by the applicant is classifiable under Heading 9973 (Leasing or rental services, with or without operator), as mentioned in the annexure at Serial No. 257 (Licensing services for the right to use minerals including its exploration and evaluation) sub-heading 997337 of Notification Number 11/2017-C.T. (Rate), dated 28-6-2017 (ii) What is rate of GST on given services provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same rate of central tax as applicable of like goods involving transfer of title in goods . With the insertion of entry (vi) relating to leasing of motor vehicles purchased and leased prior to 1st July, 2017 , in the said Sl. No. 17, vide Notification No. 31/2017-Central Tax (Rate), the said residual entry No. (vi) was renumbered as entry no. (vii). Similarly, with the insertion of entry no. (vii) relating to time charter of vessels for transport of goods in the said Sl. No. 17, vide Notification No. 1/2018-Central Tax (Rate), the said residual entry No. (vii) was renumbered as entry No. (viii). The appellant has further submitted that an entry (viia) relating to leasing or renting of goods was inserted in the said Sl. No. 17 vide Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018 (effective from 01.01.2019) and the rate of tax for the residuary entry (viii) has been prescribed as 9% (9% CGST + 9% SGST). It is the submission of the appellant that prior to issuance of Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018, the rate of tax prescribed for the residuary entry [at Sl. No. 17 of Notification No. 11/2017-Central Tax (Rate)] was the rate of central t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellant has further submitted that it appears that the GAAR is carrying misconception of matching rate of tax to the activity, whereas it has to match activity / service to the entry / sub entry and the rate of tax prescribed for the same is attracted automatically to the said activity / service. 6.6. The appellant has also submitted that though the GAAR has tried to consider the intention behind the amendment in Sl. No. 17 by Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018, but the said intention of prescribing the rate of tax for transfer of intellectual property and similar products other than IPR is not put to word in the actual Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018. 6.7 As regards the reliance placed by the GAAR on the judgment of the Hon ble Supreme Court in the case of WPIL Ltd. Vs. Commissioner of Central Excise, Meerut [2005 (181) ELT 359 (SC)], the appellant has submitted that all the three Notifications viz. Notification No. 31/2017-Central Tax (Rate), 1/2018-Central Tax (Rate) and 27/2018-Central Tax (Rate), are amending Notifications and not of clarificatory nature. It has been submitted that by virtue of these amendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rinsically linked to the classification of service, we may be required to examine the aspect of classification of service in the present case as well. Therefore, the main issues involved in this case are the proper classification / Service Code of the service involved and the applicable rate of Goods and Services Tax on the said service. Classification of Service 11. As per the facts narrated by the appellant, the Government of Gujarat, acting through the Collector of Panchamahal, has entered into lease / license agreement for 10 years whereby the appellant is entitled to carry out mining activity on a plot of land for quarrying Black Trap . As per the agreement, the appellant is required to pay ₹ 2,62,147/- per year or Royalty @ ₹ 250 per Metric Ton, whichever is higher to the Government of Gujarat. 12. In Notification No. 11/2017-Central Tax (Rate), it has been explained at clause (ii) of Para 4 that reference to Chapter , Section or Heading , wherever they occur, unless the context otherwise requires, shall mean respectively as Chapter , Section and Heading in the annexed scheme of classification of services. The Annexure attached to the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 999113 Public administrative services related to the more efficient operation of business 999119 Other administrative services of the government n.e.c. 14.2 As per the Explanatory Notes to the Scheme of Classification of Services published by the Government, Service Code (Tariff) 999113 inter-alia includes following - This service code includes : i. to vi xxx xxx vii. administrative services provided by government offices, bureaux and programme units concerning discovery, exploitation, conservation, marketing and other aspects of mineral production, including the development and monitoring of regulations concerning prospecting; mining and safety standards; activities designed to develop, expand and improve the position of manufacturing establishments; development and administration of regulations concerning building standards and issuing of occupation certificates; development and monitoring of regulations concerning safety on construction sites viii. to xxvii xxx xxx xxx 15.1 It is evident from the Scheme of Classification of Services , as discussed he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the more efficient operation of business . As against it, the 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 specificall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 17. Public Administration and other services provided to the community as a whole; compulsory social security services falling under Heading 9991 of the Scheme of Classification of Services attracts Goods and Services Tax of 18% (CGST 9% + SGST 9% or IGST 18%) as per Sl. No. 29 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended. Therefore, service 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, is chargeable to 18% (CGST 9% + SGST 9%) Goods and Services Tax as per Sl. No. 29 of Notifi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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