Classification of service— In the instant case, the advance ruling authority observed that the nature of service received by the application is covered under the Service Accounting code 997337 - “Licensing services for the right to use minerals including its exploration and evaluation”. 

The Government has been providing the service of licensing services for the right to use minerals, after its exploration and evaluation, to the applicant and the applicant has to pay a consideration in the form of rent/royalty to the Government of Bihar for the same.

The AAR Bihar further observed that the royalty in respect of mining lease is a part of the consideration payable for the licensing Services for right to use minerals including exploration and evaluation falling under the Head 9973, which is taxable at the rate applicable on supply of like goods involving transfer of title in goods up to 31/12/2018 and thereafter taxable @ 9% CGST and 9% SGST from 01.09.2019 under the residual entries of serial no. 17 of the Notification no 11/2017 central tax as amended by Notification No. 27/2018-Central Tax (Rate) dated 31/12/2018

Held that— 

(a) the service by way of grant of mining rights by the State Government is classifiable under heading 997337,

(b) the said service is covered by serial number 17 of notification number 11/2017 Central/State Tax (Rate), dated 28.06.2017, and

(c) the said service is taxable at the rate of 18% (9% CGST + 9% SGST) during the period 01.07.2017 to 31.12.2018; Post 1St January, 2019 no dispute remains, it is taxable at the rate of 18% (9% CGST + 9% SGST)