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2022 (6) TMI 419 - AAR - GSTLevy of GST - lease of land for mining - royalty paid in respect of Mining Lease can be classified under "Licensing services for the right to use minerals including its exploration and evaluation falling under the heading 9973 attracting GST - supply of like goods involving transfer of title in goods - determination of the liability to pay tax on contributions made to District Mineral Foundation (DMF) and National Mineral Exploration Trust (NMET) as per MMDR Act, 1957. HELD THAT:- The contract for mining lease cannot be classified as ‘Leasing or Renting of goods’. Further the CGST Act or rules made there under or Notifications issued do not create a legal fiction for mining to be classified as ‘Leasing or Renting of goods’. At Serial no. 17 of the Notification No. 11/2017 chapter heading no. ‘9973’ of SAC enumerates ‘leasing or rental services without an operator’. This entry was modified by removing ‘with’ operator vide Notification No. 27/2018 dated: 31.12.2018. According to explanation to this notification any reference to chapter, section or heading shall be with respect to scheme of classification of services annexed to the notification. In this annexure, the service leasing or renting of goods is enumerated under group head ‘99732’ - Under this group, the tariff item ‘997337’ enumerates ‘licensing services for the right to use minerals including its exploration and evaluation’. This is the appropriate entry concerning royalty on mining. Hence the rate of tax of the residual entry is attracted on the royalty paid for mining at the rate of 9% CGST & 9% SGST. The holder of mining lease shall also pay, to the District Mineral Foundation of the district in which the mining operations are carried under Section 9B of the MMDR Act, 1957 a sum in addition to the royalty either 1/3rd of such royalty or any other such amount in terms of Second Schedule of the MMDR Act - Similarly the holder of the mining lease shall also pay an amount of 2% of the royalty payable to the National Mineral Exploration Trust under Section 9C of the MMDR Act, 1957. Both these amounts are paid in addition to the royalty payable and in a proportion to the royalty paid for extracting minerals from a contract of mining lease. Therefore they are consideration for the service of right to use minerals including its exploration and evaluation which is enumerated as tariff item ‘997337’, this is same as royalty and hence attract tax at the rate of 9% CGST & SGST each.
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