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2019 (4) TMI 1498 - AAR - GSTClassification of service - Mining lease - services of right to use natural resources - GST on Dead rent / Royalty / Surface rent - Notification No. 11/2017Central tax (rate) dated 28.06.2017. HELD THAT:- The applicant entered in to a lease transfer agreement dated 19.03.1976 for obtaining mining lease and engaged in the business of mining of Wollastonite, Calcite, Feldspar and Quartz. The said minerals (goods) are classifiable under tariff heading 2506, 2529 and 2530 and are leviable to GST on their supply at the rate of 5%. The Government provides license to various companies including Public Sector Undertakings for exploration of natural resources like oil, hydrocarbons, iron ore, manganese etc. For having assigned the rights to use the natural resources, the licensee companies are required to pay consideration in the form of annual license fee, lease charges, royalty, etc to the Government. The activity of assignment of rights to use natural resources is treated as supply of services and the licensee is required to pay tax on the amount of consideration paid in the form of royalty or any other form under reverse charge mechanism. The mining lease is governed by the Rajasthan Minor Minerals Concession Rules, 2017 (RMMCR). As per provisions of RMMCR, the applicant is required to pay dead rent or royalty (whichever is higher but not both). This activity of payment of dead rent or royalty is a supply of service (Licensing services for the right to use minerals including its exploration and evaluation) wherein the government of Rajasthan is supplier and the applicant is recipient. The said service is classifiable under "Licensing services for 'the right to use minerals including its exploration and evaluation" at Serial No. 257, Heading 9973, Group 99733, sub heading 997337 of annexure "Scheme of classification of Services to Notification No. 11/2017-CT (Rate) dated 28.06.2017. Further, the applicant is receiving leasing / licensing services from the government of Rajasthan hence, provisions of reverse charge mechanism are applicable under the Notification No. 13/2017-CT (Rate), dated 28.06.2017 (as amended from time to time) of the CGST Act, 2017.
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