Fact: M/s Pioneer Partners (the “Applicant”) is a partnership firm. He is engaged in the business of mining of Red Boulder, Soft Boulder and GSB in the State of Haryana. The said products are classifiable under Tariff Heading 2516 and are leviable to GST on their supply at the rate of 5%. The applicant has been granted a mining lease for extracting “Stone along with associated minor minerals” at village “Pichopa Kalan”, Distt. Bhiwani, Haryana by the State Government on various terms and conditions as per the LOI and Lease deed.
Issues Involved: The petitioner is before the Haryana Authority for Advance Ruling (“the AAR”) for getting judgement in respect to following:
- What is the classification of service provided in accordance with Notification No. 11/2017-CT (Rate) dated June 28, 2017 read with annexure attached to it, by the State of Haryana to M/s Pioneer Partners for which royalty is being paid? Whether said service can be classified under 9973 specifically under 997337 as Licensing services for the right to use minerals including its exploration and evaluation or as any other service?
- What is the rate of GST on given services provided by State of Haryana to M/s Poineer Partners for which royalty is being paid?
- Whether services provided by State Government of Haryana is governed by applicability of Notification No 13/2017-CT (Rate), dated June 28, 2017 under entry number 5 and whether M/s Poineer Partners is taxable person in this case to discharge GST under reverse charge mechanism or whether given service is covered by exclusion clause number (1) of entry no 5 and State Government of Haryana is liable to discharge GST on same?
Applicant’s Interpretation of law: As per annexure to notification no. 11/2017 (Central Tax rate) dated June 28, 2017 s.no 257 specify that the Group 99733 includes sub heading 997337 which is for “Licensing services 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.
Held: The Hon’ble AAR of Haryana vide order no. HAR/HAAR/R/2018-19/03, Dated June 29, 2018 stated as follows:
- In regard to the application sought under first Issue, 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 June 28, 2017 “ Notification No. 11” is included in group 99733 under heading 9973 which is for “Licensing services for the right to use minerals including its exploration and evaluation”. Therefore, 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.
- In regard to the application sought under second Issue, the services for the right to use minerals including its exploration and evaluation “Notification No. 11” is included in group 99733 under heading 9973. Hence it attracts the same rate of tax as on supply of the like goods involving transfer of title in goods. As per notification no. 1/2017-CT (Rate), dated June 28, 2017 under the CGST Act, 2017. Therefore, the applicant attracts 5% GST (2.5 % CGST+ 2.5% HGST) as covered under HSN 2516.
- In regard to the application sought under third Issue, as per entry no. 5 of the Notification No 13/2017-CT (Rate), dated June 28, 2017 under the CGST Act, 2017 and the corresponding Notification No. 48/ST-2 dated June 30, 2017 under the HGST Act, 2017, the recipient of such services, i.e., the applicant is liable to discharge the tax liability on such services provided to it by the Government on reverse.
Citation: http://insta.instavat.in/PDF/HARYANA-ADVANCE-RULING-12.pdf