Goods and Services Tax

In Re: M/s. United Mining Corporation

2019 (2) TMI 922 – AUTHORITY FOR ADVANCE RULING, HARYANA – TMI – Classification of services – business of mining of Boulders in the State of Haryana – whether classifiable under Tariff Heading 2516 or chapter number 9973 – rate of GST – N/N./ 11/2017-CT (Rate) 28.06.2017 – Held that:- Since, a perusal of classification of services shows that services of right to use natural resources classify under tariff 9973 and since description of services under serial no. 17 (i) to (v) does not cover such services of right to use minerals therefore, it would fall under the residual entry at serial no. 17(viii). Being so, the rate of tax applicable on such services, as provided therein, shall be the same rate of tax as applicable on supply of like goods involving transfer of title in goods.

It is evident that service charge by way of annual dead rent or royalty paid for services of granting right to use mineral would attract GST rate as applicable on supply of mineral which is being extracte

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er Tariff Heading 2516 and are leviable to GST on their supply at the rate of 5%. 3. That the applicant has been granted a mining lease for extracting Stone along with associated minor minerals at village Mankawas-2 , Distt. Bhiwani, Haryana by the State Government on various terms and conditions as per the LOI and Lease deed (Annexure-4). 4. That further in accordance with the Part-Ill ( Covenants of the Lessee ) in para 3(a) of the Lease deed it has been agreed that the bid amount of ₹ 20.99 cr shall become Annual Dead Rent as amount agreed to be paid by lessee and the rate of same shall increase depending upon the terms of auction. Further, 3 r proviso to para 3(a) of Part-Ill of the executed lease deed provide:- Provided further that lessee/lessees shall be liable to pay the dead rent or royalty in respect of each mineral, whichever is higher but not both. 5. That under para 5 to part-Ill of the executed lease deed the Mode of payment of dead rent/royalty and surface rent has

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to understand what is the nature of service which has been provided by The State Government of Haryana to it along with the rate of GST on it and who is the person liable to discharge GST on the same. Accordingly, the applicant has framed the following questions:- Question 1: What shall be the classification of service provided by the State of Haryana to M/s. United Mining Corporation in accordance with Notification No 11/2017-CT (Rate) dated 28.06.2017 read with annexure attached to it? Question 2: Whether the said service can be classified under chapter number 9973 specifically under service code 997337 as Licensing services for the right to use minerals including its exploration and evaluation or as any other service under the said chapter? Question 3: What shall be the rate of GST on given services provided by State of Haryana to M/s. United Mining Corporation for which royalty is being paid? Comment of the Officer under section 98 (1) of the CGST, HGST Act 2017 The DETC (ST), Bhiw

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al. The submissions made in their application were considered by us on 25.7.2018 and the application was admitted being covered by clause (a) & (b) of section 97 (2) of the CGST/HGST Act 2017. As regard merits, the decision was reserved which is being released today. Discussion and finding of the authority For the purpose of understanding the questions involved, the applicant in his application has highlighted the following relevant provisions of the law:- 1. Section 9 of the CGST Act 2017 which is charging section of Goods & Services Tax states: 9(1) Subject to provisions of sub-section (2), there shall be levied a tax called the central goods and services tax on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 and at such rates, not exceeding twenty per cent., as may be notified by the Government on the recommendations of the Council and collected in such manner as m

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vices for the right to use minerals including its exploration and evaluation . According to the applicant the Royalty or the Dead Rent paid by the applicant to the Government is nothing but an amount paid for getting right to use the minerals granted to it for a specified period as per terms of the lease. 5. That in given transaction, the LOI and lease deed has been executed for leasing of mines. Hence, it is the stand of the applicant that, the classification of services in accordance with Notification No.11/2017-CT (Rate) 28.06.2017, according to applicant is covered at Sr. No. 17 of the notification. 6. Since, a perusal of classification of services shows that services of right to use natural resources classify under tariff 9973 and since description of services under serial no. 17 (i) to (v) does not cover such services of right to use minerals therefore, it would fall under the residual entry at serial no. 17(viii). Being so, the rate of tax applicable on such services, as provide

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he backdrop of above discussions and findings the advance ruling on the questions is pronounced as under: – 1. What shall be the classification of service provided by the State of Haryana to M/S United Mining Corporation in accordance with Notification No 11/2017-CT (Rate) dated 28.06.2017 read with annexure attached to it? Ruling The services for the right to use minerals including its exploration and evaluation, as per Sr. No. 257 of the annexure appended to notification no. 11/2017-CT (Rate), dated 28.06.2017 is included in group 99733 under heading 9973. The royalty/dead rent paid/payable to the Government by the applicant is consideration against the transfer of right to use minerals including its exploration and evaluation as per the lease granted by the Government to the applicant. 2. Whether the said service can be classified under chapter number 99731 specifically under service code 997337 as Licensing services for the right to use minerals including its exploration and evalua

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