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TMI Blog2020 (10) TMI 854X X X X Extracts X X X X X X X X Extracts X X X X ..... Ballari District 583118(herein after referred to as Appellant) against the ROM order No. KAR/ROM 01/2020 dated: 23rd March 2020. Brief Facts of the case: 3. The Appellant, a State-controlled mineral producer of Government of India. It is owned by the Government of India and is under the administrative control of the Ministry of Steel. It has operations in Karnataka, Chhattisgarh and Madhya Pradesh. It operates Donimalai Iron Ore Mine in Donimalai in Ballari District and also operates a pellet plant adjacent to Donimali Iron Ore Mine in Karnataka. Government of Karnataka has issued in principle approval to NMDC Ltd (Donimalai) for renewal of ML No. 2396 for a period of 20 years w.e.f. 04.11.2008. The Appellant is required to pay royalty at 15% as per Section 9B of the Mines and Minerals (Development & Regulation) Act, 1957. Royalty is collected by the State Government from the business entities for right given to them to extract mineral and is payable based on quantum mineral removed or consumed. Further, Section 9B and 9C of the Mines and Minerals (Development & Regulation) Act, 1957 mandates that the Appellant shall contribute 30% of royalty to District Mineral Foundation and 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvance Ruling order dated 21-09-2019 in terms of Section 102 of the CGST Act, 2017. In the ROM application, the Appellant stated that the Advance Ruling Authority had not ruled as to whether or not the contributions towards DMF and NMET amount to supply in terms of Section 7 of the CGST Act and that the Authority had erred in considering the said payments as single payment whereas they are two different transactions. 7. The Authority examined the ROM application and concluded that the Authority had considered all the submissions and that there is no error / apparent mistake on the face of the record and hence the ROM application was rejected in terms of Section 98(2) of the CGST Act vide order No KAR ROM 01/2020 dated 23-03-2020. 8. Aggrieved by the rejection of the ROM application, the appellant has filed this appeal on the following grounds. 8.1. Payment of royalty is not a supply under GST and is not liable to GST. They submitted that royalty is in the nature of periodical payments to be made by the lessee (Appellant) in consideration of the various benefits granted by the lessor (Govt); that royalty is required to be paid at a certain percentage of average sale price on ad v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me is in response to /for consideration; that in their case, there is no activity undertaken by DMF Trust and NMET at the behest of the Appellant for a consideration; that the Appellant is mandated under law to contribute to the trusts set up and the payment made is in the nature of contribution and not consideration. Even assuming that GST is payable for any service received by the Appellant, the same is payable by the Trusts and not the Appellant under reverse charge mechanism. 8.4. They submitted that DMF and NMET Trusts work to mitigate adverse impact of mining and carry out the welfare and development of people inhabited near mining areas; that in order to carry out the said objective, miners like the Appellant contribute to these Trusts; that there is no supply made by the Trusts to the Appellant in return for this contribution. Further they submitted that even if it is assumed to be a supply by DMF and NMET, the Appellant will be liable to pay the tax under reverse charge only when the supply is made by the Central Govt, State Govt, Union Territory or local authority to a business entity. In this case, the Trusts established under the Mines and Mineral (Development & Regul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntribute to the trusts set up in law. The payment made by the Appellant is purely in the nature of contribution and cannot be regarded as a consideration. Even assuming that GST is payable on the contributions made to DMF and NMET, the same cannot be held liable to reverse charge at the hands of the appellant but has to be a forward charge payable by the Trusts. 9.4. The authorised representatives pleaded that the order of the lower Authority may be set aside in view of the above submissions. 9.5. On a specific query by the Members regarding the admissibility of the instant appeal which is based on an order passed by the lower Authority in terms of Section 98(2) of the CGST Act and not under Section 98(4) of the said Act, the authorised representatives submitted that subsequent to the issue of the advance ruling, they had applied for a rectification of mistake in as much as some issues were not addressed by the lower Authority. However, the lower Authority rejected the ROM application and hence the same is merged with the original advance ruling and an appeal has been filed against the merged order. They further submitted that the ROM application has been filed within the stipula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pportunity of hearing has been given to the applicant: Provided also that where the application is rejected, the reasons for such rejection shall be specified in the order. (3) A copy of every order made under sub-section (2) shall be sent to the applicant and to the concerned officer. (4) Where an application is admitted under sub-section (2), the Authority shall, after examining such further material as may be placed before it by the applicant or obtained by the Authority and after providing an opportunity of being heard to the applicant or his authorised representative as well as to the concerned officer or his authorised representative, pronounce its advance ruling on the question specified in the application. (5) Where the members of the Authority differ on any question on which the advance ruling is sought, they shall state the point or points on which they differ and make a reference to the Appellate Authority for hearing and decision on such question. (6) The Authority shall pronounce its advance ruling in writing within ninety days from the date of receipt of application. (7) A copy of the advance ruling pronounced by the Authority duly signed by the members an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Authority vide order dated 23-03-2020, in terms of Section 98(2) of the said Act in as much as the Authority had considered all the submissions and pronounced a ruling on all questions of the applicant and there was no error/mistake which was apparent on record. It is against this rejection of ROM vide order dated 23-03-2020 that this appeal has been filed before us. 15. A reading of the above provisions of law makes it clear that an appeal can be filed before the Appellate Authority only against an advance ruling pronounced in terms of Section 98(4). In this case, the ruling pronounced in terms of Section 98(4) is the advance ruling order No KAR ADRG 69/2019 dated 21-09-2019 = 2019 (10) TMI 865 - AUTHORITY FOR ADVANCE RULING, KARNATAKA. An appeal is maintainable only against the said order dated 21-09-2019 within the statutory period of 30 days from the date of communication of the said order. However, no appeal has been filed before us against the advance ruling dated 21-09-2019. The Appellant contends that the order rejecting the ROM application merges with the original order and hence the appeal filed against the ROM rejection order dated 23-03-2020 is to be considered as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ypographical correction is made. However, having regard to the nature of original order and rectification order, if the correction cannot be in the original order, the rectification becomes an addendum to the original order, both being read together...." 17. From the above, it is clear that even in cases where a rectification of mistake application is admitted and a mistake apparent on record is corrected, the original order is not set aside. The original order remains on record and only the mistakes are corrected therein. The principle of doctrine of merger will not apply in such cases. Any appeal can be made only against the original order which will be read together with the correction made in the rectification order. In this case, the rectification application was not admitted as there was no error apparent on record and hence, the original order stands without any changes. The ROM rejection order does not merge with the original advance ruling order. The original advance ruling stands without any corrections. The appeal should have been filed by the Appellant against the advance ruling order dated 21-09-2019 within the period of 30 days from the date of communication of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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