In re Chhattisgarh state Power Generation Company Limited (GST AAR Chhattisgarh)
Applicability of GST Tax liability under the provisions of reverse charge mechanism (RCM), on the ‘Abhivahan Shulk’ collected by the government
i. The amount paid by M/s Chhattisgarh State Power Generation Co. Ltd. Raipur, Chhattisgarh, the applicant to the Forest department of Chhattisgarh as “Abhivahan permission shulk” for obtaining permission for transit of coal from the Forest area, is liable for GST at the applicable rate and is not eligible to “Nil” rate of tax provided under sr. no. 4 and 5 of the Notification No 12/2017-Central (Rate), dated 28-6-2017, being not covered under the functions envisaged under article 243G and 243W of the Constitution of India.
ii. The applicant is also not eligible for “Nil” rate of tax on the said “Abhivahan permission shulk”, provided under sl. No. y of afore mentioned Notification No 12/2017-Central (Rate), dated 28-6-2017, for the reasons as delineated above.
iii. The said “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 CGST@ 9% + CGGST@ 9% and the applicant is liable for GST on the said “Abhivahan permission Shulk”, under reverse charge basis in terms of Serial No. 5 of the Notification No. 13/2017-Central Tax (Rate), dated 28-6-2017 (as amended).
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, CHHATTISGARH
The applicant, M/s Chhattisgarh State Power Generation Co. Ltd. Raipur, Chhattisgarh (here in after referred to as CSPGCL) holding GSTIN- 22AADCC5772F1ZW has *led –in application U/s 97 of the Chhattisgarh Goods & Services Tax Act, 2017 seeking advance ruling on the applicability of GST Tax liability under the provisions or reverse charge, mechanism, on the “Abhivahan Shulk” collected by the Government Of Chhattisgarh.
2. Facts of the case and contention of the applicant:- The applicant Chhattisgarh State Power Generation Company Limited (in short CSPGCL) having its registered office at Vidyut Sewa Bhawan, Dagania, Raipur , Chhattisgarh is a fully owned state government undertaking engaged in the generation of electricity having power generation plants at different locations in the State of Chhattisgarh. The applicant is duly registered under GST holding GSTIN 22AADCC5772F1ZW at Circle 1, Raipur (C.G). The main raw material for generation of power is coal. A coal mines was allotted to company by the Ministry of Coal GOI for extraction of coal to be used in generation of power. The production in coal mines was commenced with effect from 01.12.2019. As the coal mines being situated in a forest area, hence as per Forest Act and notification issued in this regard vide No. F06-02/2014/10-2 read with Chhattisgarh Abhivahan (Vanopaj) Niyam, 2001, Rs. 15/- per ton is payable to the Forest Department for issuance of transit pass as clearance of the Coal which is called “Abhivahan Shulk.” The amount payable to the Forest department is on per ton basis and transit pass was issued on per vehicle basis. A vehicle normally consists of 12 to 30 tonnes of coal, thus the per vehicle charges i.e. Abhivahan Shulk is normally less than Rs. 5000/- per transit pass. Considering the above CSPGCL is of the opinion that no GST is payable on the “Abhivahan Shulk” collected by the Government of Chhattisgarh, under the provision of RCM.
2.1 It is in this backdrop that CSPGCL, the applicant seeks advance ruling on the following questions:-
i. Whether amount paid to the Forest department as Abhivahan permission shulk is liable to be taxed under GST or exempt as per the clause 4 and 5 of the Notification No 12/2017 being in the nature of pure service and same is used for specific purpose of “Urban forestry, protection of the environment and promotion of the ecological aspect” hence covered under the article 243G and 243W of the constitution being functions entrusted to the Municipality and Panchayat, Hence not liable to tax under GST?
ii. Whether as each transaction is separate transaction and Abhivahan Shulk charged is always less than Rs 5000/- per transactions and is not covered by the definition of continuous supply of service u/s 2(33) of the CGST Act 2017, hence exempt under no No 9 of the Notification No. 12/2017?
3. Personal Hearing:-
Keeping with the established principles of natural justice, personal hearing in the matter was extended to the applicant in person, as requested by them and accordingly, Shri Ashutosh Shrivastava, F.C.A. and authorized representative of the applicant appeared before us for hearing on 26.03.2021. He also furnished a written submission dated 26.03.2021, which has been taken on record.
4. The legal position, analysis and discussion:-At the very outset, we would like to make it clear that the provisos for implementing the COST Act and the Chhattisgarh GST Act, 2017 [hereinafter referred to as “the CGST Act and the CGGST Act”] are similar and thus, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the CGGS1 Act, 2017. Now we sequentially proceed to discuss the issues involved in the ruling so sought by the applicant and the law as applicable in the present case.
4.1 Section 96 of CGST Act, 2017, Authority for advance ruling, stipulates as under:-
Subject to the provisions of this Chapter, for the purposes of this Act, the Authority for advance ruling constituted under the provisions of a State Goods and Services Tax Act or Union Territory Goods and Services Tax Act shall be deemed to be the Authority for advance ruling in respect of that State or Union territory.
Section 97(2) of CGST Act, 2017 stipulates that:-
The question, on which the advance ruling is sought under this Act, shall be in respect of—
(a) classification of any goods or services or both;
(b) applicability of a notification issued under the provisions of this Act;
(c) determination of time and value of supply of goods or services or both;
(d) admissibility of input tax credit of tax paid or deemed to have been paid;
(e) determination of the liability to pay tax on any goods or services or both;
(f) whether applicant is required to be registered;
(g) whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of aoods or services or both, within the meaning of that term.
Further 103 of CGST Act, 2017 stipulates about the ruling pronounced as under: -The advance ruling pronounced by the Authority or the Appellate Authority under this Chapter shall be binding only –
a. On the applicant who had sought it in respect of any matter referred to in sub-section (2) of section 97 for advance ruling;
b. On the concerned officer or the jurisdictional officer in respect of the applicant.
Thus in view of the above section 103 of CGST Act, 2017, the ruling so sought by the Applicant would be binding only on the Applicant and on the concerned officer or the jurisdictional officer as stipulated above.
2. Before proceeding ahead to address the issues raised by the applicant on merits, this authority finds it opportune to mention here that Section 95 (a) of the CGST Act, 2017 defines Advance Ruling as a decision provided by the Authority or the Appellate Authority to an applicant on matters or on questions specified in sub-section (2) of section 97 or sub-section (1) of section 100, in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. This authority would also like to clarify that, although in the instant case the points on which ruling is sought by CSPGCL pertain to the supply of services by the service provider taxable at their end being the supplier of services, the applicant before us is CSPGCL and the impugned supply is by the Forest Department, Chhattisgarh as has been submitted by the CSPGCL. Having observed as above, we also intend to look in to sub-section (3) of Section 9 of the GST Act, which states as under:-
(3) The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods of services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of Such goods or services or both.
Further Notification No. 13/2017-Central/State Tax (Rate) dated 28-6-2017, issued under the above sub-section reads as under:-
……………. GSR. (E).- In exercise of the powers conferred by sub-section (3) of section 9 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council hereby notifies that on categories of supply of services mentioned in column (2) of the Table below, supplied by a person as specified in column (3) of the said Table, the of central/state tax leviable under section 9 of the said Central Goods and Services Tax Act, shall he paid on reverse charge basis by the recipient of the such services as specified in column (!) of the said Table:-
TABLE
From the above stated provisions of law, it follows that when the. services are supplied by the State government, CGST Act, 2017 has cast the onus upon the business entity receiving service / recipient of service as being liable for applicable tax under reverse charge basis. In the present case, as brought about by the applicant, the services are rendered by the Forest Department of the State of Chhattisgarh. Thus, in view of the above entry in the Notification issued for the purposes of Section 9(3) of the GST Act, the applicant would be liable to pay tax in respect of the services received from the said supplier of services viz. Forest Department of the State of Chhattisgarh, and accordingly the applicant being the receiver of the services as also since the applicant is directly impacted with the applicability or otherwise of CGST/SGST on the impugned supply of services being the party herein, this authority intend to pass the rulings sought for by the applicant on the issues raised.
4.2 Thus we proceed to discuss the issues involved above. We have carefully considered the submissions made by the Applicant and the applicable statutory provisions. The Indian Forest Act, 1927 provides that all produces from the mines, if extracted from forest land or transported through forest area shall be called forest produce. As per Chhattisgarh Transit (Forest Produce) Rules, 2001, a transit pass is mandatory for transportation of any forest produce from forest land and is issued by Forest Department after payment of prescribed transit fee . The transit fee is levied on the quantity of forest produce being extracted and transported by the lease holder. Coal is a ‘forest produce’ under Section 2 of the Indian Forest Act, 1927 since it is formed from plant substances preserved from complete decay in a normal environment and later altered by various chemical and physical agencies. The formation of coal itself is due to large tracts of forest getting buried under the ground due to natural processes such as foods and sedimentation. Hon’ble Supreme Court of India in its judgment dated 15 September 2017, in the matter of State of Uttarakhand vs Kumaon Stone Crusher decided the issue of levy of transit fee on forest produce arising out of the States of Uttar Pradesh, Uttarakhand and Madhya Pradesh wherein the State Governments levied transit fees on forest produce ender the Indian Forests Act, 1927 which wci challenged by the assessees in the respective three High Courts which delivered different verdicts. Thereafter, Hon’ble Supreme Court, held that levying of fee on transit of forest produce by the State Governments to be constitutionally valid.
4.3 Now coming to the merits of the case it is seen that the relevant clauses of Notification No. 12/2017-CT(R) dated 28-06-2017, read as under:-
In exercise of the powers conferred by sub-section (1) of section 11 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on being satisfied that it is necessary in the pubic interest so to do, on the recommendations of the Council, hereby exempts the intro-State supply of services of description as specified in column (3) of the Table below from so much of the central tax leviable thereon under sub-section (1) of section 9 of the said Act, as is in excess of the said tax calculated at the rate as specified in the corresponding entry in column (4) of the said Table, unless specified otherwise, subject to the relevant conditions as specified in the corresponding entry in column 1(5) of the said Table, namely:-
