Telangana Appellate Authority for Advance Ruling(AAAR) recently held that the Applicant is obliged to pay GST on the forest permit fee paid by it under reverse charge mechanism and it would attract 18% Goods and service tax.
The applicant, M/s Singareni Colleries Company Ltd, is a government owned coal mining company and it is jointly owned by the Government of Telangana and Government of India. They operate mines in the state of Telangana. They have coal mining projects in various places. M/s. Singareni Collieries Company Limited is entering into contracts with a host of vendors/suppliers for extraction of coal. Under rule (3) of State Forest produce transit rules they are liable to pay a certain amount to move the mined coal through the forest area as permit fee at the rate of Rs. 10 per ton of coal transported.
The applicant sought the advance ruling before the Authority of Advance Ruling on the issue of whether GST is attracted on reverse charge on this amount paid to the Forest department?
After considering the application of the applicant the advance Ruling Authority of Telangana ruled that GST would be payable on forest permit fee on reverse charge basis but GST is payable on forest permit fee paid by the applicant would not be eligible to a lower rate of tax for the period prior to 01-01-2019.
Against the order of the AAR the applicant filed an appeal before the Appellate Authority for Advance Ruling.
Applicants submit that for the supply of permits in triplicate the Telangana Forest department charges an amount of Rs.10.00/Tonne/Cmt for Major minerals/Minor minerals/Granite under Rule 5(5) of Andhra Pradesh Forest Produce Transit Rules, 1970.
Further the forest department collects permit charges and issues permits. This permit enables the applicant to move their mined produce that is coal to other places. Therefore the charges collected are nothing but the amount collected by the forest department to issue permission to transport the coal. The applicant stated that the service provided by the state government that was forest department was related to social forestry and farm forestry which was mentioned at entry no 6 of Eleventh schedule of the constitution, hence they are eligible for exemption till 26-07-2018.
The Authority observed that service provided was in relation to Farm Forestry and social forestry and it was exempted from tax as per notification no 12/2017 is untenable.
The Appellate Authority consists of member Neethu Prasad , and B. V. Sivanaga Kumari, ruled that the supply is to be classified as Public Administrative Services falling under Entry 29 of Notification No: 11/2017 Dated 28-06- 2017, which is taxable at 18%, for the entire period.
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