The Chhattisgarh Appellate Authority for Advance Ruling ( AAAR ) in a blow to the Chhattisgarh State Power General Co. Ltd. ( CSPGCL ) ruled that no Goods and Services Tax ( GST ) exemption may be provided on ‘Abhivahan Permission Shulk’ paid by them to the Forest Department for the issuance of transit pass of mined coal.
CSPGCL is a GST-registered, fully state government-owned undertaking engaged in the generation of electricity, operating multiple power generation plants at different locations of Chhattisgarh. The Ministry of Coal, Government of India allotted a coal mine to CSPGCL for the extraction of coal to be used in power-generation.
The coal-mine being located within a forest area comes under the control of the Forest Department, and thereby required CSPGCL to pay a levy of Rs.15 per ton of extracted coal for the issuance of clearance transit pass – also known as “Abhivahan Shulk”. The vehicles used by CSPGCL to transport coal generally consist of 12 to 30 tonnes coal, therefore having an Abhivahan Shulk of less than Rs.500 per transit pass.
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CSPGCL queried the payability or exemption of GST on the Abhivahan Shulk collected by the Government of Chhattisgarh in relation to Sl. No. 4 and 5 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.
Furthermore, the Appellant queried whether the extraction and transfer of coal would be in the nature of pure service since the same is issued for specific purpose of “Urban forestry, protection of the environment and promotion of ecological aspect”, as per Article 243G and 243W of the Constitution, being functions entrusted to the Municipality and Panchayat.
The second segment of the Application based the claim for GST exemption on the fact that each transaction for each Clearance Pass is always less than Rs.5000 and therefore not a “continuous supply of service” under Section 2(33) of the Central Goods and Services Tax Act ( CGST ) Act, 2017.
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The two-member Bench of Chandra Prakash Goyal and Rajat Bansal observed that the permit charges collected by the forest department is used by them to oversee the mining activity and not related to any of the tenets of urban forestry and protection of the environment under Articles 243G and 243W of the Constitution of India.
Matters being so, the same were deemed not eligible for NIL rate of GST, as provided under Sl. No. 4 and 5 of Notification No.12/2017-Central Tax (Rate).
Regarding the issue of the activity being “continuous supply of services”, the Bench observed that the Abhivahan Shulk is paid by CSPGCL on a recurring basis to the Forest Department and would squarely be covered under the category of “supply of continuous service” under Section 2(33) of the CGST Act, 2017 and therefore not eligible for Nil rate of tax on the “Abhivahan Permission Shulk”
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