9911796707
TMI Blog2024 (10) TMI 770X X X X Extracts X X X X X X X X Extracts X X X X ..... 6/B, Deccan Chambers, 4th Floor, Somajiguda, Telangana-500082, Hyderabad (hereinafter "the applicant") is fit to pronounce advance ruling as it falls under the ambit of the Section 97 (2) (a) given as under: (b) applicability of a notification issued under the provisions of the Act (c)determination of time and value of supply of goods or services or both (d) Admissibility of input tax credit of tax paid or deemed to have been paid (e) determination of the liability to pay tax on any goods or services or both (f) whether applicant is required to be registered under the Act A. SUBMISSION OF THE APPLICANT (in brief):- 1. The applicant is a Limited Company incorporated in India under the Companies Act, 1956 and is in the business of manufacturing and selling cement in south India having Corporate Registered Office at 6-3-666/8, Deccan Chambers, Somajiguda, Hyderabad. The applicant is having its manufacturing plant in the State of Telangana. 2. To expand its business activities in manufacturing and trading in cement throughout India, the applicant intended to start manufacturing unit in the State of Rajasthan. For this purpose, the applicant participated in Tender process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... security deposit, additional amount towards security deposit shall be provided; (d) satisfying the conditions specified in clause (b) of sub-section (2) of section 5 of the Act with respect to a mining plan; and (e) [satisfying such other conditions as may be specified by the State Government with the prior approval of the Central Government.] 10.3 Execution of Mine Development and Production Agreement: The State Government and the Successful Bidder shall enter into the MDPA upon the Successful Bidder having obtained all consents, approvals, permits, no-objections and the like as may be required under applicable law for commencement of mining operations. 10.4 Grant of mining lease: Subsequent to execution of the MDPA, the Successful Bidder shall pay the third installment of the Upfront Payment which is INR 27,67,70,952.00 (Indian Rupees Twenty-Seven Crore Sixty-Seven Lakh Seventy Thousand Nine Hundred Fifty-Two Only). Upon such payment the State Government shall grant a mining lease to the Successful Bidder within a period of 30 days from the date of payment. The date of the commencement of the period for which a mining lease is granted shall be the date on which a dul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d mean reference to similar provisions under the RGST Act, 2017 and the Notification issued there under, wherever applicable, unless specified otherwise. 1. According to Section 9 (1) of the CGST Act, 2017 tax shall be levied on all intra State supplies of goods or services or both on the value determined under Section 15 and at such rates as may be notified by the Government and collected in such manner as prescribed. According Section 9 (3) of the CGST Act, 2017, the Government may, on recommendation of the Council, by notification, specify categories of supply of goods or services or both on which the tax shall be paid on reverse charge basis by the recipient. 2. It is submitted that subheading 997337 of SAC covers, Licensing services for the right to use minerals including its exploration and evaluation, covered under no. 17 in Notification No. 11/2017-Central Tax (rate) dated 28.06.2017 modified from time to time and attracts the same rate as applicable for supply of goods involving transfer of title in goods. Hence in this case GST is to be paid @ 18%. 3. According to serial no.5 in Notification No.13/2017-Central Tax (rate) dated 28.06.2017 modified from time to time, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicable to the upfront payment made by the applicant as per the terms and conditions of the Tender Document as these payments are made to entering in to mining lease agreement with the Government. The question of payment of royalty to Government arises only after entering in to the mining lease agreement and hence the upfront amount cannot be considered as advance toward payment of royalty as by the time of payment, there is no supply agreement between the supplier and recipient of services. Any payment made subsequent to entering in to mining lease agreement but before providing the supply of services can be considered as advance payment for supply of services and for these payments only the provisions relating to time of supply under Section 13 of the CGST Act is applicable. Hence applicant is of the view that the upfront amounts paid prior to entering in to mining lease agreements are not liable to GST at that point of time of payment but are liable to GST only after the mining lease come in to effect. 7. In this regard the applicant relies on the Advance Ruling given in the case of M/s. Essel Mining & Industries Ltd by the Authority for Advance Rulings, Madhya Pradesh (Repo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 and involved in activities of manufacturing and selling of cement in south India having Corporate Registered Office at 6-3-666/B, Deccan Chambers, Somajiguda, Hyderabad. The applicant is having its manufacturing plant in the State of Telangana. 3) To expand its business activities in manufacturing and trading in cement throughout India, the applicant intended to start manufacturing unit in the State of Rajasthan. For this purpose, the applicant participated in Tender process for E Auction of Mining lease for Lime Stone Block at Tata Mandha - 1A (RM-1A), Tehsil Shri Mohangarh District, Jaisalmer in the State of Rajasthan invited by Department of Mines & Petroleum, Government of Rajasthan, Directorate of Mines & Geology, Udaipur. 4) Following the screening process, the applicant is selected as a Preferred Bidder in that process. The Government of Rajasthan vide letter No. P.3 (1) Mine/Group-2/2022 dated 08.03.2023 has issued Letter of Intent (LOI) in the process of allotment of mining lease. 5) For the purpose of allotment of Mining Lease, the Applicant being a Preferred Bidder and in compliance with the Tender Process has deposited Upfront Payment at different stages along with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prior to 1st July 2017; 65 per cent. of the rate of state tax as applicable on supply of like goods involving transfer of title in goods. Note:- Nothing contained in this entry shall apply on or after 1st July, 2020, [*** *** *** [[(viia) Leasing or renting of goods Same rate of State tax as applicable on supply of like goods involving transfer of title in goods [{(viii) Leasing or rental services. without operator, other than (ii), (iii), (iv), (vi), and viia) above. 9 -] Section 9 (3) of CGST Act, 2017 provides that the Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both. In term of Serial No.5 of Notification No. 13/2017-Central Rate dated 28.06.2017, the Applicant being recipient of service is liable to pay GST under RCM. The relevant notification is summarized as under-: Sl.No. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; (b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government: Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply; To determine the time of supply of services Section 13 (3) of the CGST Act, 2017 stipulates that:- In case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply shall be earlier of the following dates: (a)The date of payment as entered in the books of account of the recipient or the date on which the payment debited in his bank account, whichever is earlier; or (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f upfront payment after allotment of mines on lease, therefore upfront payment made to the State Govt. is no more deposit but advance which shall be adjusted towards future payments of revenue share amount. In view of the above, we find that the Applicant is liable to pay GST on the upfront payments made to the State Govt. under Reverse Charge Mechanism (RCM) in term of Serial No.5 of Notification No. 13/20317-CetraI Rate Dated 28.06.2017, 10) The next question is if GST is payable, whether they can pay GST from state of Telangana or to apply for registration in the state of Rajasthan for payment of GST. In this context, the legal provisions are stipulated in Section 24 of the CGST Act, 2017 which are reproduced as under:- Compulsory registration in certain cases-Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons shall be required to be registered under this Act,- (i)......... (ii) ......... (iii) persons who are required to pay tax under reverse charge; We observe that in term of Section 24 (iii) of CGST Act, 2017 read with corresponding provisions of SGST Act,2017, the person who is required to pay tax under RCM, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services or both. As discussed above, the tax payable under the provisions of sub-section (3) and (4) of Section 9 is included in input tax and the credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger and so the applicant is eligible to avail ITC of GST paid by them under RCM subjected to fulfilment of conditions laid down under section 16 of CGST Act, 2017. In view of the above discussion, we rule as under:- RULING Q1. Whether the applicant is liable to pay any GST on the Mining Lease payments (applicability of GST on the Royalty payment of Mining Lease to Government of Rajasthan under Reverse Charge Mechanism). Ans 1-The Applicant is liable to pay GST on Mining Lease Payments including Royalty, to be paid to the Govt. of Rajasthan under RCM. Q2. If the applicant is liable to pay GST on the above, what will be the applicable rate of GST. Ans 2-The applicable rate of GST is 9% & CGST 9%). Q3. If GST is applicable, whether the applicant is liable to pay GST on the payment of Upfront Payments as per ..... X X X X Extracts X X X X X X X X Extracts X X X X
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