TMI BlogGST — FAQ on Mining dated 31-07-2017X X X X Extracts X X X X X X X X Extracts X X X X ..... : What is the IGST rate for minerals and ores in case of inter-State supply? Answer : At present, the IGST rate is the sum of CGST and SGST/UTGST rate. These rates have been notified and are available in public domain. Question 6 : Can the buyer get input credit on the supply of minerals from a mine owner in composition scheme? Answer : No, the buyer cannot avail of the credit of tax paid by the supplier who is under the composition scheme as the person paying tax under composition scheme cannot issue a tax invoice and collect taxes on his supplies. Question 7 : Will the recipient have to pay tax under reverse charge? Answer : GST on reverse charge mechanism is payable under section 9(4) of the CGST Act, 2017 only in case of purchases from unregistered suppliers. As the mine owner who is paying tax under composition scheme is registered, the recipients need not pay GST on reverse charge mechanism. Question 8 : What is the threshold limit and conditions when a small mine owner/lease holder under Composition Scheme has to migrate into full GST System? Answer : As per section 10(3) of the CGST Act, 2017, the option availed of by the small m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 : Can a buyer of goods and services pay the value of services/goods to the supplier and deposit the GST component of the invoice in the supplier s account so that when the buyer claims input credit, he may get the same cross entry tallied from the supplier s account? Answer : No. This option is not available under GST Law. Question 14 : In case there are disputes regarding quality, weight, etc. between the buyer and the supplier and the goods are returned fully or partially, as found unfit for use, can the excess paid tax component be adjusted from future tax liability? Answer : In such cases, the supplier may issue a credit note to the recipient in accordance with the provisions of section 34(1) of the CGST Act, 2017. Question 15 : Whether deduction of Liquidity Damage (LD)/Penalty deduction from contractor s bills and charging Penalty for non-lifting of coal till targeted minimum level to Annual Contractual Quantity (ACQ) will attract GST? Answer : Yes, it is a service being tolerating an act as per Schedule II of the CGST Act, 2017 thus GST shall apply. Question 16 : Will GST be payable at the time of raising an invoice for supply of goods f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax payable will get reduced by the amount of tax paid on the advance and balance amount of advance may be adjusted against future supplies. Question 21 : Will GST charged on purchase of all earth moving machinery including JCB, tippers, dumpers by a mining company be allowed as input credit? Answer : The provision of Sec. 17(5)(a) of the CGST Act, 2017 restricts credit on motor vehicle for specified purposes listed therein. Further, in terms of the provision of Section 2(76) of the CGST Act, 2017 the expression motor vehicle shall have the same meaning as assigned to it in Clause (28) of Section 2 of the Motor Vehicle Act, 1988, which does not include the mining equipment, viz., tippers, dumpers. Thus, as per present provisions, the GST charged on purchase of earth moving machinery including tippers, dumpers used for transportation of goods by a mining company will be allowed as input credit. Question 22 : Whether GST is payable on royalty (to be paid to Government) for Mining Lease granted by State Govt. Answer : Yes, on royalty GST will apply under reverse charge mechanism. Further, such payment of GST under reverse charge mechanism would be eligible as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of mineral from mine to the buyer be allowed as ITC to the buyer irrespective of the ownership of the transporting vehicle? Answer : In case of an FOR contract for supply of mineral from the mine to the buyer, it is a composite supply where the consideration will be inclusive of the transportation cost. Therefore, GST on forward charge will be payable by the supplier of the mineral and credit will be available to the buyer if otherwise available. The supplier of the mineral will also pay tax on reverse charge basis on the freight charged by the GTA and the credit of the same will be available to the supplier of the mineral. In case of an ex-works contract of supply, where the GTA service has been booked by the supplier at the instance of the buyer and the service is billed by the GTA to the buyer and the minerals are billed by the supplier of the mineral to the buyer, then GTA on reverse charge shall be paid by the buyer who shall be entitled to take credit of the same. The tax on the mineral will be paid on forward charge by the supplier of the mineral and credit will be available to the buyer if otherwise available. Question 29. Will the situation as mentioned ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplier of such goods may issue a credit note for the full value, including the amount of GST in favour of the recipient, and will be entitled to reduce his output tax liability subject to the condition that the recipient of such supply has not availed credit of such GST and if availed, has reversed his ITC on the same. Question 35. How can we take support during filing of returns, as huge mines are located throughout the districts in the country, especially in rural and backward areas, and the problem will be aggravated as the huge number of mines are operating without any IT infrastructure? Answer : Returns may be filed from the central office of the Company which are usually located in areas with infrastructure required for filing such returns. Question 36. Whether GST TDS will be applicable on Works Contract Jobs (to be renamed as Supply of Services) in case of PSUs, since such GST TDS U/s. 51(1) of CGST Act, 2017 is applicable on : a) Dept., or establishment of the Central Govt., or State Govt.; or b) Local authority; or c) Govt., agencies; or d) Such persons or category of persons as may be notified by the Govt., on the recommendations of the Council. An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e additional tax payable on account of non-production of statutory forms. Production of these forms is a statutory liability and the taxpayers have already availed the benefit. Question 40. Education Cess and S H Education Cess carried forward in ER-1 - whether eligible for ITC under the CGST Act, 2017? Answer : No. Credit of Education Cess and SH Education Cess cannot be carried forward. Question 41. What will happen to the balance available in the current account (PLA) under Central excise, deposited in cash in advance by any assessee? Answer : Balance in PLA will not be under transition to GST since that has not been appropriated to the Government account which will be determined post completion of the pending assessment. The same can be claimed as refund under the Central Excise Law. Question 42. Whether credit of Green Cess (Clean Energy Cess) paid on coal and available at the time of transition be eligible for being carried over? Answer : No. Credit of Clean Energy Cess cannot be carried forward on transition. Question 43. Whether stock held by mining companies on which Clean Energy Cess has been paid be chargeable to compensation ces ..... X X X X Extracts X X X X X X X X Extracts X X X X
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