2024 (7) TMI 152 - AAR - GST

Classification of goods and services - consideration charged from customers for supplying aggregates and recovering royalty charges - rate of GST on the supplies as per N/N. 01/2017-CGST (R) and N/N. 11/2017-CGST (R) - HELD THAT - On careful examination of the submissions made by the applicant ,it is observed that the applicant is collecting tax on the royalty charges collected and the goods supplied separately in the tax invoices. The submissions of the applicant is considered that the supply of the aggregate and recovery of royalty charges do not fall under the purview of mixed supply or composite supply but are two different and separate. The royalty charges collected by the applicant would fall under SAC 997337 and would attract 9% CGST and 9% SGST. The supply of aggregates manufactured from the boulders would fall under HSN code 251710 and attract CGST @2.5% and SGST @2.5%.

Summary

Issues: Classification of goods and services for consideration charged & Rate of GST on supplies

Classification of Goods and Services:
The case involved an application filed under the Central Goods & Services Tax Act and Andhra Pradesh Goods & Services Tax Act by a company engaged in manufacturing aggregates from boulders purchased from quarries. The applicant sought clarification on the classification of goods and services for supplying aggregates and recovering royalty charges. The applicant maintained that the supply of aggregates and recovery of royalty charges were separate and not a composite or mixed supply.

Rate of GST on Supplies:
The applicant issued tax invoices for royalty charges at 18% and for aggregate value at 5%. The issue was to determine the applicable rate of GST on these supplies as per specific notifications. The applicant collected tax on royalty charges and goods supplied separately, emphasizing the distinct nature of these transactions.

Discussion and Findings:
Upon examination, it was noted that the applicant treated royalty charges and aggregate supply as distinct transactions. Reference was made to Circular No. 164/20/2021-GST, clarifying the classification of services related to mining rights. It was concluded that royalty charges fell under SAC 997337, attracting 9% CGST and 9% SGST, while aggregates were classified under HSN code 251710, with CGST at 2.5% and SGST at 2.5%.

Ruling:
1. The royalty charges collected were classified under SAC 997337, and the supply of aggregates under HSN code 251710.
2. The rate of GST for royalty charges was determined at 9% CGST and 9% SGST, while aggregates attracted CGST at 2.5% and SGST at 2.5% as per specific notifications.

This comprehensive analysis addressed the issues of classification and GST rates, providing clarity on the tax treatment of royalty charges and aggregate supplies in the context of the Central and Andhra Pradesh GST Acts.