In re The Deputy Conservator of Forests (GST AAAR Karnataka)
The GST appellate authority for advance ruling dismissed the appeal filed by the appellant on grounds of time limitation.
It is evident that this Appellate Authority being a creature of the statue is empowered to condone a delay of only a period of 30 days after the expiry of the initial period for filing appeal. As far as the language of Section 100 of the CGST Act is concerned, the crucial words are ‘not exceeding thirty days’ used in the proviso to sub-section (2). To hold that this Appellate Authority could entertain this appeal beyond the extended period under the proviso would render the phrase ‘not exceeding thirty days’ wholly otiose. No principle of interpretation would justify such a result. Therefore, we hold that we are not empowered to condone the delay of one day in filing this appeal.
FULL TEXT OF ORDER OF APPELLATE AUTHORITY OF ADVANCE RULING, KARNATAKA
1. At the outset we would like to make it clear that the provisions of CGST, Act 2017 and SGST, Act 2017 are in pari materia and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the KGST Act.
2. The present appeal has been filed under section 100 of the Central Goods and Service Tax Act 2017 and Karnataka Goods and Service Tax Act 2017 (herein after referred to as CGST Act, 2017 and SGST Act, 2017) by The Deputy Conservator of Forests, Bangalore Urban Division, Department of Forest, Government of Karnataka, Aranya Bhavan, 18th Cross, Malleshwaram, Bangalore 560003 (herein after referred to as Appellant) against the advance Ruling No. KARIADRG 20/2019 dated 26-08-2019.
Brief Facts of the case:
3. The Appellant is a Government Department (Karnataka forest Department) and under its sovereign functions, raises “plants” of tree species. plants them in forest, waste and common lands. Over time, with the nurturing and management of the Department, these plants grow up to become trees when they are harvested to yield timber, poles, billets, firewood, pulpwood, etc which are raw material for carpentry, fuel and fibre industries.
4. The task of harvesting these trees which grew from plants planted by the Department is given to Government Corporations. The Corporations fell the trees, convert them into timber, firewood, poles, etc so that they become marketable for the primary market, load and transport the marketable timber, firewood, etc by vehicles, unload and stack the marketable timber, firewood, etc in government timber depots. All these operations done by the Corporation is termed as “logging” for which charges are paid by the Appellant to the Corporations. The Appellant submitted an application dated 02.03.2018 seeking advance ruling on the following issues: –
Issue No.1
“(A) Is it legally correct to infer that the entire service of “logging” and its components described before do not attract GST under the CGST Act, 2017? If not, what is the correct position by law?
(B) In case the trees have grown from “plants” not planted by the Karnataka Forest Department, but that which grew by natural regeneration but were nurtured, managed and protected by the Karnataka Forest Department, does the same nil rate of SGST and CGST apply to them too? If not, what would be the rate?”.
Issue No.2
“(a) In case of sale of forest produce or any other goods belonging to Karnataka Forest Department, where the buyer is registered or is based in and transports the goods to outside the State of Karnataka, what should be charged under the CGST Act 2017, (A) SGST and CGST or (B) IGST?
(b) In case of forest produce or any other goods belonging to Kamataka Forest Department, where the buyer is registered or is based outside the State of Karnataka, but uses the goods within the State of Karnataka, what should be charged under the CGST Act 2017, (A) SGST and CGST, or (B) IGST?.”
5. The Advance Ruling Authority passed Advance Ruling order No. KAR ADRG 20/2019 dated 26.08.2019, wherein they ruled as follows: –
“1. The operation of “logging” as described in Issue 1 of the application would attract tax under the Goods and Services Tax Acts and it is independent of the trees, whether planted by the Forest Department or which grew out of natural regeneration.
2. The transaction described in the application in Issue No. 2, is an intra-State supply and attracts CGST and SGST and is independent of where the goods are taken by the recipient after the supply is completed”
6. The Appellant is aggrieved by the ruling given in respect of logging activities and has filed this appeal on the following grounds.
6.1 Logging operations amounts to forestry and the same attracts nil rate of tax against entry Sl.no. 24 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 as amended which pertains to support services to agriculture, forestry, fishing, animal husbandry falling under heading 9986. As per explanation (iii) to the said entry, support services to forestry means
‘(iii) Carrying out an intermediate production process as job work in relation to cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products or agricultural produce’
Therefore, the finding of the Advance Ruling Authority in para 5.8 of impugned Ruling to the effect that activity of logging is not support service to forestry and hence, is not covered under entry No. 24 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 is not correct/rational and the same is not in harmony with the wordings of the Notification.
6.2. Further, the Hon’ble Advance Ruling Authority have made finding to the effect that such logging service received by the Appellant Applicant is of the nature of composite supply and the principal supply is covered under Sub entry (ii) of Entry No. 26 of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 and therefore, the same is taxable under CGST at 9% and SGST at 9% and similarly, the same is taxable at 18% towards IGST, as is applicable. The findings of the Hon’ble Advance Ruling Authority is not correct for the reason that Entry No. 26 in the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 relates to activities not specifically covered by entry 24 above. Entry 26 is reproduced below for immediate appreciation:
