Page 197 - GSTL_23rd April 2020_Vol 35_Part 4

2020 ] IN RE : DEPUTY CONSERVATOR OF FORESTS, BANGALORE 523

6.3. The impugned Ruling of the Advance Ruling Authority holds that
logging operations is covered under Entry 26(iv) and therefore, liable to tax at 9%
each as CGST and SGST. The Appellant makes it clear that there is entry S. No.
24 which covers logging operations, and the same occurs first in the order of the
Notification and therefore, the same is to be preferred. Furthermore, ‘manufac-
ture’ has a distinct understanding in law. Logging operations doesn’t amount to
‘manufacture’. The logging operation does not result in change in basic fea-
tures/characteristics of the product/goods to mean it as manufacturing. There-
fore, findings of the Learned Advance Ruling Authority is not proper and the
same is not in accordance with law. Therefore, the impugned ruling insofar as it
relates to logging operations is liable to set aside as not sustainable and not law-
ful.
6.4 The Hon’ble Advance Ruling Authority has not offered an oppor-
tunity to the appellant applicant to defend themselves with written submissions
against the proposed ruling holding logging operations to be manufacturing ser-
vice attracting CGST of 9% and SGST of 9% OR IGST of 18% against Entry No. 26
vide Notification No. 11/2017-Central Tax (Rate), dated 28-6-2017. The Advance
Ruling Authority ought to have given an opportunity to the Appellant Applicant
to defend himself against proposed adverse conclusion affecting the Appellant
Applicant. Having not heard the Appellant applicant, it is violation of the princi-
ples of natural justice because of which the impugned ruling is liable to be set
aside in so far as it relates to logging operations.
6.5 Manufacturing is an activity which brings out a new product with
different nomenclature, usage, identity in the market. However, the operation of
logging is only an activity of segregating timbers, poles, firewood, pulp etc., from
tree. This activity is said to be harvesting activity of forest. Therefore, these activ-
ities does not result in emergence of new product to amount to ‘manufacture’.
Thus, it is evidently clear that there is no manufacturing and the same is a mis-
conception by the respected Advance Ruling Authority. Resultantly, the said rul-
ing to the extent it relates to this aspect is liable to be set aside as not sustainable
in facts of the case and in law.
6.6 The appellant strongly submits that their logging operations is cov-
ered by Entry No. 24 falling under Heading 9986 attracting nil rate of tax as the
same pertains to support services provided to agricultural, forestry, fishing, ani-
mal husbandry wherein explanation (iii) provides that ‘support services to agri-
culture, forestry, fishing, animal husbandry’ means ‘carrying out intermediary
production process as job work in relation to cultivation of plants and rearing of
life forms of animals, except rearing horses, for food, fibre, fuel, raw material or
other similar products or agricultural products’. Thus, the activity of logging of
trees into timber, poles, firewood, pulp wood etc., is support services relating to
forestry as is obvious from the heading caption of Entry No. 24 to Notification
No. 11/2017-Central Tax (Rate), dated 28-6-2017. Thus, there is no ambiguity as
to logging operations being covered by Entry No. 24 to the said Notification No.
11/2017-Central Tax (Rate), dated 28-6-2017 attracting nil rate of tax.
Personal Hearing :-
7. The appellant was called for a personal hearing on 31-1-2020. They
had sought for an adjournment and the same was held on 24th February, 2020.
GST LAW TIMES  23rd April 2020  317