RAJASTHAN AAR CLASSIFIES MINING LEASE AS LICENSING SERVICE-18% GST PAYABLE UNDER RCM

RAJASTHAN AAR CLASSIFIES MINING LEASE AS LICENSING SERVICE-18% GST PAYABLE UNDER RCM

RAJASTHAN AUTHORITY FOR ADVANCE RULING

GOODS AND SERVICES TAX

Case Title: M/s Aravali Polyart Pvt. Ltd.

(GST AAR RAJASTHAN)

Advance Ruling No. RAJ/AAR/2018-19/34

Date of Judgment/Order- 15th Febrary 2019

IMPORTANT PARAGRAPHS

Para no. 1. SUBMISSION AND INTERPRETATION OF THE APPLICANT:
a. The applicant is a private limited company registered under the provisions of the Central Goods and Services Tax Act 2017 read with the provisions of the Rajasthan State Goods and Services Tax Act 2017.
b. The applicant is engaged in business of mining of soapstone and dolomite the State of Rajasthan. The said products are classifiable under Tariff Heading 2518 and are leviable to GST on their supply at the rate of 5%. For the purpose of undertaking said mining activity, the applicant entered into a transfer agreement with Shri Ramesh Chand Singhvi on
07-04-2007 in order to obtain mining lease of soapstone and dolomite in village “Piparch”, Tehsil Badgon, District: Udaipur. That a document named “PurakSavinda” dated 08-06-2017 was executed by the applicant on stamp paper wherein the period of mining lease was extended up to 14-6-2028. In the said document it is specified that given mining lease is governed by The Rajasthan Minor Mineral Concession Rules, 2017. The said Rules are actually governed by Section 15 of the Mines and Minerals (Development and Regulation) Act, 1957 (Central Act No. 67 of 1957).

RULING

A. The activity undertaken by the applicant is classifiable under Heading 9973 (Leasing or rental services, with or without operator), as mentioned in the annexure at Serial No. 257(Licensing services for the right to use minerals including its exploration and evaluation) sub heading 997337 of notification number 11/2017-CT (Rate) dated 28.06.2017. The applicant is liable to discharge tax liability under reverse charge mechanism vide Notification No 13/2017-CT (Rate), dated 28.06.2017 (as amended from time to time) of the CGST Act, 2017.
B. The activity undertaken by the applicant attracts 18% GST (9% CGST+ 9% SGST).