The Authority for Advance Rulings (AAR), Odisha in the case of M/S. UTKAL COAL MINING INDIA PRIVATE LIMITED (UCMIPL) vide Order No.  07/ODISHA-AAR/2023-24 dated 17.05.2024, has ruled that the services provided for the transportation of coal from stockyards to railway sidings or delivery points are classified under SAC 9966, i.e., “Renting of Transport Vehicles with operator.” These services are not categorized under “Transport of goods by road” (SAC 9965). Circular 177/09/2022-TRU, is applicable to the applicant. It clarifies that such services are considered as renting of transport vehicles with an operator and not as mere transportation of goods by road. 

Facts of the Case:-  The Applicant operates as a Mine Developer and Operator (MDO) under a Coal Mining Agreement (CMA) with NALCO. A critical service under this agreement involves transporting coal from the mining stockyard to railway sidings or other delivery points specified by NALCO. The transportation is executed using vehicles provided by Utkal Coal Mining India Private Limited, which includes operators/drivers. The applicant argued that this transportation service should fall under SAC 996601, “Renting of transport vehicles with operator,” and that the GST rate applicable should be 12%. This argument was supported by Clause 9 of Circular No. 177/09/2022-TRU, issued by the CBIC on 03.08.2022, which clarifies the classification and applicable tax rates for such services.

Issue:-  The applicant sought clarification on the classification of services provided for the transportation of coal from stockyards at mines to railway sidings or delivery points under the terms of an agreement with NALCO, specifically:

1. The appropriate SAC (Service Accounting Code) for these services.
2. Applicability of Clause 9 of Circular No. 177/09/2022-TRU.
3. The applicable tax rate for the services.

Rulings:-  The AAR observed and ruled as under:

• The GST Authority for Advance Ruling (AAR) in Odisha carefully reviewed the application and the aforementioned CBIC circular.
• The circular provided clarity on the taxability of transportation services within mining areas, where vehicles with drivers are contracted to mining lease operators. Such services are considered “rental services of transport vehicles with operator” under SAC 9966 and are not treated as general transportation of goods by road.
• It was noted that, prior to 18.07.2022, these services attracted a GST rate of 18%, which was reduced to 12% after this date, provided the cost of fuel is included in the consideration charged from the recipient of the service.
• It is ruled that The service provided by Utkal Coal Mining India Private Limited for transporting coal from the mining stockyard to various points designated by NALCO is classified under SAC 9966, Renting of Transport Vehicles with Operator and apply a GST rate of 12%. This ruling aligns with the clarification provided in Circular No. 177/09/2022-TRU issued by the CBIC.