In re Pachhwara Coal Mining Private Limited (GST AAR Jharkhand)
Question – Whether the provision of such transportation service for the temporary period till extension of the railway siding to the mine location is an independent activity, and exempted from the payment of GST under SI. No. 18 of Notification No. 12/2017-CT(R) dated 28 June 2017?
Answer – The transportation service supplied by the applicant to The West Bengal Power Development Corporation Ltd (WBPDCL) will fall under the other supporting transport services (Heading 996793) and covered under Entry ll(ii) of the Notification No. 11/2017-C.T. (Rate), dated 28.06.2017 & would be chargeable to GST at 18% (CGST 9% + SGST 9%) as provided under the Notification No. 11/2017-C.T. (Rate), dated 28.06.2017 (as amended).
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, JHARKHAND
Note: Under Section 100 of the JGST Act 2017, an appeal against this ruling lies before the Appellate Authority for Advance Ruling constituted under section 99 of JGST Act 2017, within a period of 30 days from the date of service of this order.
PROCEEDINGS
(Under sub-section (4) of Section 98 of Central Goods and Service Tax Act, 2017 and the Jharkhand Goods & Service Tax Act, 2017)
The present application has been filed under Section 97 of the Central Goods and Services Tax Act, 2017 and the Jharkhand Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and JGST Act”] by Pachhwara Coal Mining Private Limited, the applicant, seeking an advance ruling in respect of the following question:-
Whether the provision of such transportation service for the temporary period till extension of the railway siding to the mine location is an independent activity, and exempted from the payment of GST under SI. No. 18 of Notification No. 12/2017-CT(R) dated 28 June 2017?
2. At the outset, we would like to make it clear that the provisions of both the CGST Act and the JGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the JGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act/JGST Act would be mentioned as being under the “GST Act”.
HEARING
3. The case was taken up for hearing on dated 05.03.2021 with respect to admission or rejection of present application when Shri Harish Bindumadhavan, Advocate along with Shri R. Subba Raju, Authorized Signatory of the applicant appeared and made submissions as per contentions made in their application.
OBSERVATIONS
4. We have gone through the facts of the case including documentary evidences like copies of agreement and written submission made by the applicant. We find that the applicant is registered under Goods and Services Tax (‘GST’) Act, 2017. As per their submission they are a special purpose vehicle (SPV) formed through a consortium between NCC Limited (NCC) and BGR Mining & Infra Limited (BGR) for carrying on the business of Mine Developer and Operator (MDO) having stakes of 51% and 49%, respectively. The West Bengal Power Development Corporation Ltd (WBPDCL) had floated a Request for Proposal (RFP) for engaging a Mine Developer and Operator for extracting coal and connected transportation services in their captive mines located at Pachhwara North Block.
5. Being successful bidder the applicant has been awarded with the work of MDO by WBPDCL. Further, as the railway sidings were not extended till the mine at the time of execution of the contract, the applicant was also required to provide transportation services so as to deliver the extracted coal to the railway sidings as directed by WBPDCL for the period of 5 years by when the railway line extension is expected to be completed by WBPDCL. The scope of work as summarized by the applicant is as follows,-
(i) Drilling and blasting operations with appropriate safeguards and compliance to statutory requirements
(ii) Excavation of OB by excavators and transportation by dumpers to OB dumping locations as per the Mining Plan
(iii) Mining of ROM coal by surface miner as per the Mining Plan and transportation of coal by dumpers to the mine pit top
(iv) Delivery of coal at the Delivery Point
(v) For the initial period, till extension of Pakur railway siding to the Mine, which is expected to be 5 (five) years from the Coal Production Start Date, the scope of work for the MDO would also cover:-
(a) Loading of coal from the mine pit top to tipper trucks for transportation
(b) Transportation of coal by tipper trucks to the railway siding at Pakur and unloading of coal at the railway siding at Pakur.
(c) Loading of coal onto railway wagons including the associated tasks of maintaining the railway siding at Pakur.
(vi) Undertake community development and welfare activities in the local community.
6. Further, as per para 9.4.3 of the agreement, the lowest final price of the LI Bidder shall be split into two parts, –
(i) Base Mining Charge shall be considered to be 80% (Eighty percent) of the lowest Final Price of the LI offer – this shall be the base charge for the production of coal and all associated activities and bringing the coal to the pit top of the mine.
(ii) Base Transportation & Handling Charge shall be considered to be 20%o of the lowest Final Price offer of the LI Bidder – this shall be the base charge for transportation of coal from the mine pit top to the railway siding at Pakur, including loading of coal onto the railway rakes and ensuring proper operation, maintenance and security of the railway siding. This charge shall be payable till the time the MDO is required to transport coal by road to the railway siding at Pakur.
(iii) Both the Base Mining Charge and the Base Transportation & Handling Charge shall be computed upto 2 decimal places.
7. As per the bid, the MDO shall be responsible for providing adequate security for preventing the theft and pilferage of coal upto the Delivery Point. The quantity of coal excavated from the mine in a month shall be determined based on monthly Laser Measurement. The quantity of coal excavated shall be reconciled with the quantity of stock at the mine and at the Delivery Point and quantity of coal dispatched from mine. Transit and handling losses shall be allowed to the extent of 0.5% of quantity of the coal excavated as calculated through the in-situ Laser Measurement and after dividing the volume of coal excavated by the specific gravity of the coal. The MDO shall be penalized for any transit and handling losses beyond the 0.5% and the quantum of the penalty shall be 300% of the prevailing per ton Mining Charge payable to the MDO.
8. Pursuant to receipt of the said contract, the applicant sub-contracted the entire contract, i.e., extraction of coal, storage and handling and the temporary transportation of such coal to designated delivery points, to BGR in terms of the operation and maintenance agreement dated 12 December 2018 entered with them. Therefore, BGR would be effectively carrying out all the activities of CMA. As submitted by the applicant, the consideration payable for the subject supplies between PCMPL and BGR is as follows,-
(i) Mining charges shall be INR 569.66 per Ton; and
(ii) Transport & Handling shall be INR 142.42 per Ton.
9. It has also been submitted by the applicant that,-
(i) the independent transporters (employed by BGR) issue invoices to BGR for the transportation services;
(ii) BGR issues invoices to PCMPL separately for extraction of coal and for transportation services;
(iii) PCMPL issues invoices to WBPDCL, separately for both the services as per the individual process agreed for the said supplies.
(iv) For carrying out the transportation activities, BGR has engaged more than two hundreds independent transporters who have been providing the transportation services. In this regard, such independent transporters in terms of the said agreements, would deploy suitable trucks along with experienced drivers at the disposal of BGR at the mine location for a minimum agreed quantity of coal to be transported for the subject period of 5 years. BGR would incur the requisite costs for diesel for such trucks and would also install tracking equipment and monitor the movement of such trucks deployed by the transporters during such contract period.
(v) The following procedure is adopted by BGR in the transportation of such extracted coal to the designated delivery points of WBPDCL as per the contractual terms
