In re BGR Minactivity of transportation of coal from the mine to the railway siding ing & Infra Limited (GST AAR Jharkhand)
Question (a) – Whether the at Pakur, till the time the railway siding is made operational at the mine, is an independent activity or part of supply of mining service?
Answer (a) – Activity of transportation of coal from the mine pit-head to the railway siding is an independent activity.
Question (b) – If the provision of transportation of coal is an independent activity, whether exemption is available to the applicant as ‘transportation of goods by a person other than GTA’?
Answer (b) -The transportation work supplied by the applicant to PCMPL is a 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-Central Tax (Rate), dated 28-6-2017 (as amended).
Question (c) – Whether the applicant is liable to pay GST under RCM on the transportation services received from the transporters, as they are not issuing consignment note?
Answer (c) – Services received from the unregistered transporters by the applicant falls under the definition of “GTA” services (Heading 9965) in terms of Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017 as substituted vide Notification No. 20/2017-Central Tax (Rate), dated 22.08.2017 and the same are covered under ‘RCM’ in terms of Notification No. 13/2017-Central Tax (Rate), dated 28-6-2017.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, JHARKHAND
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 BGR Mining & Infra Limited, Amaghata, Govindpur, Dhanbad, Jharkhand-826 005 [Correspondence address – H. No. 8-2-596/R, Road No. 10, Banjara Hills, Hyderabad-34], the applicant, seeking an advance ruling in respect of the following questions:-
(a) Whether the activity of transportation of coal from the mine to the railway siding at Pakur, till the time the railway siding is made operational at the mine, is an independent activity or part of supply of mining service?
(b) If the provision of transportation of coal is an independent activity, whether exemption is available to the applicant as ‘transportation of goods by a person other than GTA’?
(c) Whether the applicant is liable to pay GST under RCM on the transportation services received from the transporters, as they are not issuing consignment note?
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 preliminary hearing on 08/09.02.2021 with respect to admission or rejection of present application wherein Shri Vipin Verma, Advocate along with others appeared and made submissions as per contentions made in Application for Advance ruling. The application was admitted being questions related to classification and called for final hearing on 05.03.2021. Shri Vipin Verma, Advocate and Shri N. Vijaya Sai Reddy, Authorized Signatory appeared and made oral and written contentions as per details in their application.
OBSERVATIONS
4. We have gone through the facts of the case, documentary evidences like copies of agreements, invoice/bill, transporting papers 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 engaged in the business of execution of infrastructure projects and mining of coal. They have submitted, among others, that,-
(i) A Coal Mining Agreement (CMA) has been entered between The West Bengal Power Development Corporation Ltd (WBPDCL) and M/s Pachhwara Coal Mining Private Limited (PCMPL) for development & operation of Pachhwara North Coal Block and deliver coal to WBPDCL in accordance with the Mining Plan. PCMPL is a special purpose vehicle (SPV) and is the Mine Developer and Operator (MDO). As per the terms of the CMA, PCMPL has to remold the over burden and extract the coal from the mine. PCMPL is also required presently to transport the extracted coal from the mine to the railway siding at Pakur, Jharkhand and load onto railway rakes for delivery to WBPDCL till the time the railway siding is extended upto mine location. The distance between the mine and railway siding at Pakur is about 55 Kms (one way).
(ii) As per CMA, WBPDCL shall pay to PCMPL the mining charge @Rs. 619.20 per ton of coal delivered at the delivery point(s). Further CMA provides that WBPDCL shall pay Transportation & Handling Charges @Rs. 154.80 per ton of coal transported by PCMPL from the mines to the railway siding at Pakur and loaded onto railway rakes at the railway siding.
(iii) The transportation activity undertaken by PCMPL is only a temporary activity for the initial period of 5 years and the same would be terminated after the railway siding is constructed/extended to the mine location, post which the charge out rates for the transportation services to the delivery point located within the mine would be re-visited/re-determined.
(iv) Pursuant to receipt of the contract from WBPDCL, PCMPL has sub contracted the entire work i.e. removal of overburden, extraction of coal, storage & handling and the temporary transportation of coal to the designated delivery points to the applicant on back to back basis by entering into an Operation and Maintenance (O&M) Agreement dated 12th December 2018.
(v) As per O&M agreement, PCMPL shall pay Rs. 569.66 per ton towards base mining charge and Rs. 142.42 per ton towards Transportation & Handling Charges to the applicant. In the O&M agreement the mining charges for extraction of coal from the mines and transportation & handling charges for transportation of coal from the mine to the railway siding at Pakur and loading onto railway rakes is agreed separately.
(vi) For the purpose of transportation of coal from the mine to the railway siding at Pakur, the applicant is availing transportation services from truck owners/operators (transporters). However, the transporters are not issuing consignment note or any similar document to the applicant towards transportation of coal from the mine to the railway siding.
(vii) As per terms of contracts, the transporters deploy the trucks alongwith drivers at the mine for transportation of coal from the mine to the railway siding. The applicant installs tracking equipment and monitor the movement of such trucks deployed by the transporters during the contract period.
(viii) The procedure adopted by the applicant for transportation of extracted coal from the mine to the railway siding (delivery point of WBPDCL) and documents issued for the said transportation are as follows,-
