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2019 (11) TMI 1327 - AAR - GSTLevy of GST - reverse charge mechanism - royalty paid/dead rent on account of mining rights - Applicant is in the business of mining/ quarrying of broken or crushed stone which is commonly used for concrete aggregates, for road metalling or for railways falling under HSN 2517 - rate of GST - HELD THAT:- 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 AP Minor Minerals Concession Rules, 2017 (APMMCR). As per provisions of APMMCR, 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 on supply of service (Licensing services for the right to use minerals including its exploration and evaluation) wherein the government of Andhra Pradesh 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 - the service undertaken by the applicant falls at item (viii) of serial no. 17 of notification no. 11/2017 dt:28-06-2017, further amended vide Notification No. 27/2018-Central Tax (Rate) dt:31-12-2018 and attracts 18% GST (9% CGST+ 9% SGST) w.e.f. 01.01.2019. The applicant is receiving leasing / licensing services from the government of Andhra Pradesh. 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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