Reverse charge mechanism— In the instant case, the applicant M/s. Singareni Collieries Company Limited) is entering into contracts with a host of vendors/suppliers for extraction of coal. Under rule (3) of State Forest produce transit rules they are liable to pay a certain amount to move the mined coal through the forest area as permit fee at the rate of Rs. 10 per ton of coal transported. The applicant is desirous of ascertaining whether GST is attracted on reverse charge on this amount paid to the Forest department.

Questions raised for advance ruling are as follows—

1. Whether, in the facts and circumstances of the case, the Applicant is obliged to pay GST on the forest permit fee paid by it under reverse charge mechanism?

2. Alternatively, if GST is payable on forest permit fee paid by the Applicant, can services received by the Applicant be classifiable under heading 9973 of Notification No. 11/2017 Central Tax (Rate) dated 28th June, 2017 and thus be exigible to a lower rate of tax for the period prior to 01-01-2019?

The coal mines operated by the applicant are situated in the forest area and under rule 3 of the State Forest produce transit rules, no forest produce shall be moved into or from within the State by land or water. Such movement is permitted only when the person moving the produce obtains a forest permit by paying a fee which in the instant case is Rs. 10 per ton of coal transported.

The facts of the present case clearly reveal that the forest department is collecting transit fee to allow the transit of vehicles carrying coal through the forest area, thus this is covered under entry 5(e) of the Schedule II to the CGST Act, 2017 wherein ‘to do an act’ is deemed to be a service. Forest department’s act of allowing such vehicles through forest area is therefore covered under this head. Further these services are not classifiable under heading ‘9973’ of Notification No. 11/2017 as the same relate to ‘Leasing or rental services without an operator’ whereas the present service relates to Entry 5(e) of the Schedule II to the CGST Act, 2017.

Held that— GST is payable on forest permit fee on reverse charge basis.

The supply is to be clarified as tolerating to do an act and is to be treated as service as per entry 5(e) of the Schedule II to the CGST Act, 2017.