The Chhattisgarh Authority for Advance Ruling (AAR) ruled that 18% Goods and Services Tax attracted towards the Abhivahan Shulk (Transit Fee) to transit coal from Forest area under Reverse Charge Mechanism RCM).
The applicant, Chhattisgarh State Power Generation Company Limited (CSPGCL), is an entirely state-owned enterprise that produces electricity and has power facilities spread throughout the state of Chhattisgarh. Coal is the primary raw material used to create electricity. The Ministry of Coal granted a corporation access to a coal mine so that it may extract coal for use in producing electricity.
Additionally, the Forest Department must receive Rs. 15 per tonne in payment for the transit pass that serves as clearance for the coal known as “Abhivahan Shulk.”
The typical weight of a vehicle is between 12 and 30 tonnes of coal, hence the per-car fee, or Abhivahan Shulk, is typically under Rs. 5000 per transit ticket. In light of the aforementioned, the CSPGCL believes that no GST is due on the “Abhivahan Shulk” that the Chhattisgarh government has collected in accordance with RCM.
In the present case CSPCCL, the authority observed that the applicant while performing its business activity of mining of coal at an allotted coal mine situated in a Forest and subsequently while the said coal is moved from the Forest area to their place of business for the intended purpose of generation of power, it is mandated to obtain a permission for transit of the same in the form of a transit pass on payment of a scheduled fees.
Further added that the grant of permission by way of issuance of transit pass for movement of coal in a Forest area can by no stretch of imagination be equated to performing a sovereign function as envisaged under Article 243W of the Constitution of India.
The bench of Sonal K. Mishra and Rajesh Kumar Singh decided that “Abhivahan permission shulk” paid by the applicant to the Forest department for the permission granted by the Forest department of Chhattisgarh, merits classification under the residuary Heading 9997 for other services with the tax rate of 18% and the applicant is liable for GST under reverse charge basis in terms of Serial No. 5 of the Notification No. 13/2017-Central Tax (Rate).
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