ODISHA AUTHORITY FOR ADVANCE RULING

GOODS AND SERVICE TAX (GST)

RAJASWAVIHAR, BHUBANESWAR-751007(ODISHA)

PROCEEDINGS OF THE AUTHORITY FOR ADVANCE RULING

U/S.98 OF THE GOODS AND SERVICE TAX ACT, 2017

Members Present:

1. Sri Abhay Gupta. IRS, Additional Commissioner, Office of the Chief

Commissioner, GST, Central Excise & Customs, Bhubaneswar

2. Sri Nihar Ranjan Nayak, Additional Commissioner, Office of the

CT& GST Commissionerate Odisha, Banijyakar Bhawan,

Cantonment Road, Cuttack-753001- Odisha.

Subject: M/s. Utkal Coal Mining India Private Limited (herein after referred to as the 'Applicant') having principal place of business/registered office/corresponding address at D.NO.386/110, PLOT NO.43/B/20, MISHRA PADA, ANGUL, ODISHA,759122 bearing GSTIN 21AADCU0404G1Z3 has filed an application for advance ruling under Section 97 of CGST Act, 2017 and Section 97 of the OGST Act, 2017 in FORM GST ARA-01 discharging fee of Rs. 5,000/- each under the CGST Act and the SGST Act.

1.0 The Applicant has sought ruling in respect of the following questions:

(a) Whether the services provided by the applicant as described in Article 2.1.(y) of the agreement entered between the applicant and NALCO for transportation of coal (mineral) from the coal stockyard located at mines to the Railway sliding or up to the delivery point as per the requirements of service recipient for a specified period and at an agreed price as mentioned in the agreement will be classified under SAC 9966 i.e., Renting of Transport Vehicles(or) under SAC 9965 i.e., Transport of goods by road or under any other SAC code.

(b) Whether the Clause no. 9 of the circular No. 177/09/2022-TRU issued by the CBIC is applicable to the applicant for the services provided as described in Article 2.1.(y) of the agreement for transportation of coal (mineral) from the coal stockyard located at mines to the Railway sliding or upto the delivery point as per the requirements of service recipient for a specified period and at an agreed price as mentioned in agreement.

(c) What will be the applicable tax rate for the services provided as described in Article 2.1.(y) of the agreement for transportation of coal (mineral) from the coal stockyard located at mines to the Railway sliding or upto the delivery point as per the requirements of service recipient.

1.1 At the outset, we would like to make it clear that the provisions of both the CGST Act and the OGST 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 OGST Act.

2.0 Submission of the Applicant

2.1 The Applicant is a company incorporated under the companies act 2013, as a SPV for executing the work as a Mine Developer and Operator (MDO) for Utkal D&E Coal Mine (4 MTPA) Angul, owned by National Aluminium Company Limited (NALCO) and entered into a Coal Mining Agreement (CMA) with NALCO on 8th day of March 2022, vide Document No.MEC/11/16/Q7GL/MDO/01, as a Mine Developer and Operator (MDO).

2.2 The scope of the work includes removal of Overburden & Mining of coal, building infrastructures, loading of coal into vehicles, transportation of coal from the coal stock yard to the railway sliding's or to the NALCO desired delivery points, coordination for R&R and mine-closure activities and others.

2.3 The Applicant in its submission has stated the relevant portion of the agreement made with NALCO which is under:-

"Loading and transportation of coal from the coal stockyard at mines to Kerjanga railway siding, stacking at designed place near the railway siding, loading of coal into wagons at kerjanga railway siding. Further upon commissioning of the proposed MCRL railway siding, MDO shall convey the coal from the coal stockyard upto the rapid loading silo of proposed MCRL railway siding and load the coal into wagons for despatch to the delivery point.

In the event MCRL railway siding does not get commissioned, the coal produced from mine shall continue to be transported to kerjanga railway siding. MDO shall be responsible to transport the coal produced from the mines to kerjanga railway siding at the agreed rates as per the coal mining agreement. Further, in the event kerjanga railway siding does not get commissioned, coal from the coal stockyard shall be transported by the MDO through road upto the delivery point at agreed rates of transportation charges as per the coal mining Agreement. Necessary permissions, approvals and clearances for transportation of coal from mines to delivery point shall be obtained by MDO for the same. "

2.4 The Applicant submitted that as per the CMA the price for the coal transportation is to be paid by NALCO per Ton of coal delivered and the entire costs including diesel is in the scope of Applicant.

2.5 The Applicant relies on the clarification issued by CBIC vide clause no. 9 in the circular No. 177/09/2022-TRU, contended that the service of transport of minerals from mining pit head to railway siding, beneficiation plant etc., by vehicles deployed with operator for a specific duration of time is treated as "Renting of transport vehicles with operator" Under "SAC 996601" and applicable rate of GST is @ 12% on such transportation services .

2.6 The Applicant also submitted that as per the recommendation of the GST Council, renting of trucks and other freight vehicles with driver for a period of time is a service of renting of transport vehicles with operator falling under Heading 9966 and not service of transportation of goods by road. On such rental services of goods carriages where the cost of fuel is in included in the consideration charged from the recipient of service, GST rate has been reduced from 18% to 12% with effect from 18.07.2022. Prior to 18.07.2022, it attracted GST at the rate of 18%.

3.0 The personal hearing was fixed on 23.04.2024 under due intimation to the Applicant, the jurisdictional officer of State GST 86 jurisdictional officer of Central GST (intimated through their respective Commissionerates along with a copy of the application and the written submission of the Applicant). The Applicant through its representative Shri Prakhyat Surapaneni, CA appeared for personal hearing. Shri Surapaneni re-iterated the submission already furnished in the application filed for advance ruling. Further, he has submitted a Coal mining Agreement ( CMA) made with M/s NALCO and requested to decide the issue accordingly. The Revenue has neither submitted its comments nor appeared for personal hearing.

Discussion & findings

4.0 We have gone through the advance ruling application, questions on which advance ruling has been sought and the Applicant's interpretation of law and/or facts, as the case may be, in respect of the questions asked. We observe that the issue before us is squarely covered under Section 97(2) of the CGST Act, 2017 and therefore we admit the application for consideration.

4.1 The Applicant in its application contended that their activity i.e transport of minerals from stock yard located in the mining premises to railway siding or to the delivery' point as per the requirements of recipient of service (NALCO) by vehicles deployed with operator is to be treated as "Renting of transport vehicles with operator" Under "SAC 996601" and applicable rate of GST is @ 12%. The Applicant in support of its submission/contention, relies on the clarification issued by the CBIC vide clause no. 9 in the circular No. 177/09/2022-TRU GST dated 03.08.2022.

4.2 The Issue was examined in detail. It is seen that the Applicant has entered into a Coal Mining Agreement (CMA) with NALCO on 08.03.2022 as a Mine Developer and Operator (MDO). The CMA lays down the scope of work of the Applicant which includes multiple activities/services like removal of Overburden & Mining of coal, building infrastructures, loading of coal into vehicles, transportation of coal from the coal stock yard to the railway siding's and mine-closure activities and others. Out of the said activities/services, one of the activity is to provide service of transportation of coal (minerals) from stockyard located at mines to the railway siding or to the delivery point as per the requirements of recipient of service (NALCO) through vehicles (as mentioned under Article 2-scope of the project, clause y of the agreement). It is also seen that the cost of diesel, operator's salary and other incidental costs incurred during the transportation services are under the scope of the Applicant as NALCO will be pay the price for transportation on per/ton basis.

4.3 The issue before us to decide about the taxability of the works/services with respect to transportation of coal located at mines to the railway siding or to the delivery point as per the requirements of recipient of service and applicable rate of GST on the said services. We see that the said issue has been clarified by GST Council in its 47th meeting held on 28th and 29th June, 2022 and necessary clarification in this regard are enumerated in Clause 9 of Circular No. 177/09/2022-TRU dated 03.08.2022. So, before proceeding to decide the issue, it is imperative for us to discuss the relevant clause of Circular No. 177/09/2022-TRU dated 03.08.2022. The relevant portion of the circular is reproduced as under:

"9. Taxability and applicable rate of GST on transport of minerals from mining pit head to railway siding, beneficiation plant etc., by vehicles deployed with driver for a specific duration of time.

9.1 Representations have been received to clarify the taxability of transport of minerals within a mining area, say from mining pit head to railway siding, beneficiation plant etc., by vehicles deployed with driver for a specific duration of time and whether the same would be covered under Sr. No. 18 of notification No. 12/2017- Central Tax (Rate) dated 28.06.201 7 which exempts transport of goods by road except by a GTA.

9.2 Usually in such cases the vehicles such as tippers, dumpers, loader, trucks etc., are given on hire to the mining lease operator. Expenses for fuel are generally borne by the recipient of service. The vehicles with driver are at the disposal of the mining lease operator for transport of minerals within the mine area (mining pit to railway siding, beneficiation plant etc.) as per his requirement during the period of contract. Circular No. 177/09/2022-TRU

9.3 Such services are nothing but "rental services of transport vehicles with operator" which fall under heading 9966 and attract GST @18% under Sr. No. 10 part (iii) of notification No. 11/2017- Central Tax (Rate) dated 28.06.2017. The person who takes the vehicle on rent defines how and when the vehicles will be operated, determines schedules, routes and other operational considerations. The person who gives the vehicles on rent with operator can not be said to be supplying the service by way of transport of goods.

9.4 Accordingly, as recommended by the GST Council, it is clarified that such renting of trucks and other freight vehicles with driver for a period of time is a service of renting of transport vehicles with operator falling under Heading 9966 and not service of transportation of goods by road. This being so, it is not eligible for exemption under SI. No. 18 of notification No. 12/2017- Central Tax (Rate) dated 28.06.201 7. On such rental services of goods carriages where the cost of fuel is in included in the consideration charged from the recipient of service, GST rate has been reduced from 18% to 12% with effect from 18.07.2022. Prior to 18.07.2022, it attracted GST at the rate of 18%".

4.4 In the said circular, it has been clarified that transport of minerals within a mining area by vehicles deployed with drivers would be a service of renting of transport vehicles with operator falling under Heading 9966 and not service of transportation of goods by road. This being so, it is not eligible for exemption under SI. No. 18 of notification No. 12/2017- Central Tax (Rate) dated 28.06.2017. On such rental services of goods carriages where the cost of fuel is included in the consideration charged from the recipient of service, GST rate has been reduced from 18% to 12% with effect from 18.07.2022. Prior to 18.07.2022, it attracted GST at the rate of 18%.

4.5 In view of the above circular and discussions, we are of the considered view that transportation of coal (minerals) within a mining area say from mining pit head or coal stockyard located at mines to railway siding, beneficiation plant etc for a specified period and at an agreed price as mentioned in the agreement will be classified under SAC 9966 i.e., Renting of Transport Vehicles and for that the applicable tax rate is 12% .

5.0 We pass the following order:

Q.1 Whether the services provided by the applicant as described in Article 2.1.(y) of the agreement entered between the applicant and NALCO for transportation of coal (mineral) from the coal stockyard located at mines to the Railway sliding or up to the delivery point as per the requirements of service recipient for a specified period and at an agreed price as mentioned in the agreement will be classified under SAC 9966 i.e., Renting of Transport Vehicles(or) under SAC 9965 i.e., Transport of goods by road or under any other SAC code.

Ans-The service of transportation of coal (minerals) within the mining area say from mining pit head or coal stockyard located at mines to railway siding, beneficiation plant etc of the service recipients by vehicles with operator would be covered under Heading 9966 i.e., Renting of Transport Vehicles. Further, on such services, where the cost of fuel is included in the consideration charged from the recipient of service, GST rate would be 12% .

Q.2 Whether the Clause no. 9 of the circular No. 177/09/2022-TRU issued by the CBIC is applicable to the applicant for the services provided as described in Article 2.1.(y) of the agreement for transportation of coal (mineral) from the coal stockyard located at mines to the Railway sliding/ or up to the delivery point as per the requirements of service recipient for a specified period and at an agreed price as mentioned in the agreement.

Ans: Clause no. 9 of the circular No. 177/09/2022-TRU issued by the CBIC is applicable to the applicant for the services of transportation of coal (mineral) from the coal stockyard located at mines to the Railway siding/Beneficiation plant etc of NALCO

Q.3 What will be the applicable tax rate for the services provided as described in Article 2.l.(y) of the agreement for transportation of coal (mineral) from the coal stockyard located at mines to the Railway sliding or up to the delivery point as per the requirements of service recipient.

Ans: The applicable tax rate is 12% w.e.f 18.07.2022 on the service of transportation of coal (mineral) from the coal stockyard located at mines to the Railway siding/Beneficiation plant etc of NALCO as the cost of fuel is included in the consideration.

6.0 The Applicant or jurisdictional officer, if aggrieved by the ruling, may appeal to the Odisha State Appellate Authority for advance ruling under Section 100 of the CGST/OGST Act, 2017 within 30 days from the date of receipt of the advance ruling.