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TMI Blog2024 (10) TMI 770X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 - the Applicant is liable to pay GST on Mining Lease Payments including Royalty, to be paid to the Govt. of Rajasthan under RCM. If the applicant is liable to pay GST on the above, what will be the applicable rate of GST? - HELD THAT:- The Applicant is liable to pay GST @ 18% (SGST 9% CGST 9%). If GST is applicable, whether the applicant is liable to pay GST on the payment of Upfront Payments as per the Tender Documents which are paid in installments much before issuing LOI and after issuing LOI but before entering in to the Lease Agreement? - HELD THAT:- The Applicant is of the opinion that payment of royalty amount to the Government will be coming in to effect only after entering in to the Mining Lease Agreement with the Government of Rajasthan. The lessor and lesee relationship will be coming into effect only after entering the lease agreement. The payments made as per the conditions in the Tender Documents prior to issue of Letter of Intent in the capacity of Preferred Bidder and payment made after issue of LOI but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the RGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / RGST Act would be mentioned as being under the GST Act . The issue raised by M/s. DECCAN CEMENTS LIMITED, 6-3-666/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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... including the value Of any newly discovered mineral that may be included in the mining lease deed on its discovery determined in accordance with the Auction Rules. In such case, bank guarantee constituting the Performance Security shall be substituted with another bank guarantee of the same value issued in accordance with this Clause 10.2, which is for the revised amount or if the Performance Security has been provided through a 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 duly executed mining lease is registered. B. INTERPRETATION AND UNDERSTANDING OF APPLICANT ON QUESTION RAISED (IN BRIEF) At the outset it is made clear that a reference to the provisions of the CGST Act, 2017 (for brevity, Act) and the Notification issued there under would 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pient or the date on which the payment debited in his bank account, whichever is earlier; or (b) The date immediately following sixty days from the date of issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier. 6. It is submitted that the time of supply provisions relating to supply of services in Section 13 of the CGST Act, 2017 is not applicable 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 v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned the statement of facts, supporting documents filed by the applicant along with the application, oral and written submissions made at the time of hearing. We have also considered the issues involved, on which advance ruling is sought by the applicant, and relevant facts. 2) The Applicant is a Limited Company incorporated in India under the Companies Act, 1956 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. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... like goods involving transfer of title in goods - (iv) Any transfer of right in goods or of undivided share in goods without the transfer of title thereof. Same rate of central tax as on supply of like goods involving transfer of title in goods - [*** *** *** [(vi) Leasing of motor vehicles purchased and leased prior to 1 st 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 rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain definitions which are relevant in the matter. Section 2 (31) of CGST Act, 2017 stipulates that consideration in relation to the supply of goods or services or both includes- (a) any payment made or to be made, whether 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 sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be made by them. Hence Section 2 (31) of CGST Act, 2017 is not applicable in the instant case. Secondly, it is evident from the tender documents that nowhere there is clause of refund of 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 ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nicated to the recipient of such invoice or debit note in the manner specified under section 37 ;] (b) he has received the goods or 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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