CLASSIFICATION AND TAXABILITY OF ROYALTY PAYMENTS FOR MINING LEASE UNDER REVERSE CHARGE MECHANISM

CLASSIFICATION AND TAXABILITY OF ROYALTY PAYMENTS FOR MINING LEASE UNDER REVERSE CHARGE MECHANISM

RAJASTHAN AUTHORITY FOR ADVANCE RULING

GOODS AND SERVICES TAX

Case Title- M/s Vinayak Stone Crusher

(GST AAR RAJASTHAN)

Advance Ruling No. RAJ/AAR/2019-20/08

Date of Judgment/Order- 17th May 2019

IMPORTANT PARAGRAPHS

Para No. 2. QUESTIONS ON WHICH THE ADVANCE RULING IS SOUGHT

(a)  What is the classification of service provided in accordance with Notification No. 11/2017-CT (Rate) dated 28.06.2017 read with annexure attached to it by the State of Rajasthan to M/s Vinayak Stone Crusher for which royalty is being paid? Whether said service can be classified under 9973 specifically under 997337 as Licensing services for the right to use minerals including its exploration and evaluation or as any other service?

(b)  What is the rate of GST on given services provided by State of Rajasthan to M/s Vinayak Stone Crusher for which royalty is being paid?

(c) Whether services provided by State Government of Rajasthan is governed by applicability of Notification No 13/2017-CT (Rate) dated 28.06.2017 under entry number 5 and whether M/S Vinayak Stone Crusher is taxable person in this case to discharge GST under reverse charge mechanism or whether given service is covered by exclusion clause number (1) of entry no 5 and State  – Rajasthan is liable to discharge GST on same?

RULING

In view of the foregoing, we rule as follows:-

(a) The service provided by the State of Rajasthan to the applicant for which royalty is being paid is classifiable under 997337.

(b) The rate of GST on service provided by the State of Rajasthan to the applicant for which royalty is being paid is 18% (SGST9%+CGST9%).

(c) As the applicant is recipient of the services provided by the State of Rajasthan he is liable to pay GST on reverse charge basis under entry number 5 of the Notification No 13/2017-CT (Rate) dated 28.06.2017 and is not covered by exclusion clause number (1) of entry No.5 of the said Notification.

(d) The services supplied by State Government of Rajasthan to Excess Royalty Collection Contractor (ERCC) by way of assigning the right to collect royalty on behalf of the State Government is exempted with certain restrictions by way of Notification No. 12/2017-Centra1 Tax (Rate) dated 28-6-2017 as amended by Notification no. 14/2018-CT (Rate) dated 26.07.2018, However, the applicants is liable to discharge GST on reverse charge basis.