9911796707
TMI BlogPAYMENT OF RCM ON SENIORAGE CHARGESX X X X Extracts X X X X X X X X Extracts X X X X ..... Sir, It is submitted that one of my client has paid the tax on senior age charges through forward charges for the period from July 2017 to March 2023 as there was no clarity for payment of RCM on senior age charges till issue of Circular No.164/20/2021-GST dated 6-10-2021 now department is asking to pay the RCM on senior age charges. Recently Apex court given the judgement that the senior age charges is not tax and levy of GST on senior age charges is pending. Therefore we request to clarify for payment of GST on senior age charges by way of RCM - Reply By Sadanand Bulbule - The Reply = Refer issued ID No.119484 which is on similar query. - Reply By KASTURI SETHI - The Reply = (i) Tax cannot be charged twice. Same transaction cannot be char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged more than once. Case laws can be traced out. One case law is appended below. Case laws pertaining to GST regime on the issue is also available. Make efforts. 2013 (4) TMI 552 - CESTAT AHMEDABAD - ANGIPLAST PVT. LTD. Versus COMMISSIONER OF SERVICE TAX, AHMEDABAD (ii) However, a Clarificatory circular has always retrospective effect, unless specifically mentioned otherwise. - Reply By DEVARA SIVAPRASAD - The Reply = It is a Composite Supply of Services in terms of the MMDR Act, 1957 and APMMC Rules, 1966 made there under, by way of issuance of Permit/License under Lease deed for i. Assignment/Transfer of Right to carry out Mining Operations for the purpose of winning/Extract any Mineral from the Mine ii. Assignment/Transfer of Right to ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aluate the Extracted Mineral iii. Assignment/Transfer of Right to dispatch the Extracted Mineral iv. Any other incidental or ancillary Services to carry out the Assignment/Transfer of right to use Minerals including its Exploration and Evaluation as the ambit scope of the Impugned Services covers under Inclusive definition It is supply of Composite Services by the State Government, which are naturally bundled and supplied together in the ordinary course of business of the Mining Industry and the principal supply being the Supply of Licensing Services for Assignment/Transfer of right to undertake Mining Operations for the Purpose of Winning or Extracting Granite Mineral from the Mine. As seen Tariff Notification No. 11/2017-Central Tax (rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) dt. 28.06.2017 as amended from time to time, Impugned services of assignment/Transfer of right to use Minerals including its exploration and evaluation does not have most specific description up to 31-12-2018 like in service Tax regime. Even though, various Tariff entries were there for Leasing and rental Services but the same are related to the Transactions involved in supply of Goods and the subject Impugned services are naturally bundled Services and there is a transfer of Right in the Immoveable property only to extract and use the Granite Moulds etc . In other words, there is no leasing or renting of goods in the subject Transaction. As such, the Impugned services fit to be classified under residual services of Services nowhere speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied under the Heading of 9997 and attracting CGST Rate @9%adv up to 31-12-2018. However, after the amendment of Notification No.11/2017-Central Tax (Rate) dt.28.06.2017 vide Notification No.27/2018-Central tax (rate) dt.31.12.2018 , the Impugned Services are having most Specific Description under Licensing Services for the right to use Minerals including its exploration and Evaluation falling under the Clause (Viii) at S.No.17 of the Tariff Notification No.11/2017-central tax (Rate) dt.28.06.2017 and having specified Tariff Service Accounting Code of 997337, attracting CGST rate of 9%adv. As such, the Impugned Services are taxable attracting CGST rate @ 9%adv under residual Services of 9997 up to 31-12-2018 and attracting CGST rate @9%adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under specific tariff Service Code of 997337 from 01-01-2019 onwards. Similarly, for the same reasons, the transactions are taxable under SGST at 9%adv right from 01-01-2017 onwards. As such, the said Impugned Services are taxable Supply in terms of the Section 2(108) of the CGST Act right from 01-07-2017 onwards. Therefore after the amendment of Notification No.11/2017-Central Tax (Rate) dt.28.06.2017 vide Notification No. 27/2018-Central tax (rate) dt.31.12.2018 , the Impugned Services are having most Specific Description under Licensing Services for the right to use Minerals including its exploration and Evaluation falling under the Clause (Viii) at S.No.17 of the Tariff Notification No.11/2017-central tax (Rate) dt.28.06.2017 and having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified Tariff Service Accounting Code of 997337, attracting CGST rate of 9% adv. The said Tariff Service Accounting Code has been deciphered as follows: 99: 99 denotes Chapter Number and covers All services 7: 7 denotes Section Number under Chapter No. 99 and covers Financial and related Services; real estate Services; and rental and leasing Services 9973: 9973 denotes Heading Number under Section 7 of the Chapter 99 and covers Leasing and rental Services with or without Operator 99733: 99733 denotes Group Number under the heading of 9973 of section 7 of the Chapter 99 and it covers Licensing Services for the Right to use Intellectual Property Rights and similar Products 997337: 997337 denotes the Tariff Service Accounting Code under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Group of 99733 of the Heading 9973 of the section 7 of the Chapter No. 99 and it covers the licensing Services for the Right to use Minerals including its exploration and evaluation. From the above, it is very clear that the Impugned activity of State Government, i.e.; Supply of Licensing Services by the State Government for the right to use Minerals to the Petitioner clearly falls under the Tariff SAC of 997337 . VALUATION:- As seen from the definition provided for Consideration under the Section 2(31) of the CGST Act, 2017 clearly indicates that any income generated on account of Supply of Impugned Services attracts GST under GST regime and any income generated on account of Provision of Services attracts Service Tax read with definitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n provided for Consideration under Indian Contract Act 1872, before the introduction of GST. F urther, as seen from the ambit Scope of the Section 15 of the CGST Act, 2017 read with Section 2(31) ibid doesn t bar to include all Charges including any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act, the State Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act. From the provisions of Section 9 of the MMMDR Act and the APMMC Rules, 1966, it is also clearly understood that the Royalty/Seigniorage Fee is the consideration made by the Petitioner towards receipt of Impugned Services. Further, as seen from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Section 9(B) 9(C) ibid that the DMF Charges/Cess/Tax and NMET/MERIT CHARGES as the case may be, Charges are directly linked to the Royalty amount paid and the same are being paid as a percentage of the Royalty amount as per directions of Central/State Government, as the case maybe. As such, it is clearly understood that these charges are being paid on account of supply of Impugned Services. The same is evident from the Provisions of MMDR Act, 1957 and APMMC Rules,1966 that the Mining Lease holder should pay DMF Charges, NMET/MERIT CHARGES as the case may be, or MERIT Charges, as the case may be in addition to royalty for extracting and to use such Mineral. In other words, Payment of DMF charges, NMET/MERIT CHARGES as the case may be, Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arges in addition to Royalty on account of receipt of Impugned Services is a sine-qua-non for getting the Mining Lease/license. Otherwise, the mining Permit would be put on hold and the petitioner is not able to utilize the extracted Mineral. Then, there would be no supply. The Principles of interpretation of Specified Description of Services or bundled Services as exists under the Finance Act,1994 would be applicable even in GST era in terms of the section 174(3) of the CGST Act read with Section 6 of the General Clauses Act, 1897 as the GST Law is silent on the aspect of Principles of interpretation of Specific Description of Services or in other words, there is no specific provision under the GST Law to say that a different intention app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eared in the GST Act other than which appears in the Erstwhile Finance Act, 1994 with regard to Principles of interpretation of Specified Description of Services or bundled Services. By applying the said principles of interpretation of Specified Description Services or bundled Services, following inferences can be drawn: Where a service is capable of differential treatment for any purpose based on its description, the most Specific description will prevail over General Description in terms of clause (2) of the section 66F of the Finance Act, 1994 . if various elements of such service are naturally bundled in the ordinary course of business, it shall be treated as provision of the single service which gives such bundle its essential characte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in terms of the Clause 3(b) of the Section 66F of the Finance Act, 1994 . - Reply By DEVARA SIVAPRASAD - The Reply = In continuation to the above, as seen Tariff Notification No. 11/2017-Central Tax (rate) dt.28.06.2017 as amended from time to time, Impugned services of assignment/Transfer of right to use Minerals including its exploration and evaluation as existing in Service Tax regime does not have neither most specific description nor General Description up to 31-12-2018. Even though, various Tariff entries were there for Leasing and rental Services but the same are related to the Transactions involving supply of Goods whereas the subject Impugned services are naturally bundled Services involving transfer of Right in the Immoveable pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty to extract and use the Granite Mineral. In other words, in the subject Transaction, there is no leasing or renting of goods and thus there are no underlying Goods to be transferred in the subject Transaction. As such, the Impugned services fit to be classified under residual services of Services nowhere specified under the Heading of 9997 attracting CGST Rate @ 9% adv up to 31-12-2018. Hope I clarified this issue. You have misinterpreted the Apex Court issue or u have not gone through the judgment, I feel. In the Apex Court issue, the subject issue was dealt in an incidental manner. However, it has clarified so many issues with regard to Levy of GST on Royalty Fee/Seigniorage Charges. Pl go through the Of late Himachal Pradesh recent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment which clarified the levy of GST upon Royalty/Seigniorage Charges. - Reply By DEVARA SIVAPRASAD - The Reply = While coming to your Query, it is not clear how did he pay Tax on Seigniorage Charges for the Composite Supply made by the State Government. - Reply By KASTURI SETHI - The Reply = Dear Querist, (i) Your client is the service recipient and Govt. (Central or State) is the service provider (supplier). How can your supplier deposit GST under FCM ? (ii) The term, 'Seigniorage charges' does not find place in the Board's Circular dated 06.10.21. How the circular is applicable to the subject issue ? (iii) Mention the citation of the judgement of the Supreme Court. (iv) It appears that the query has not been properly fra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med. It has been framed without going deeply into the circular and the judgement of the Apex Court. - Reply By Sadanand Bulbule - The Reply = Dear Sir, Pecisely you have pointed out the pits in the query. - Reply By KASTURI SETHI - The Reply = As per legal dictionary meaning of the word, 'seigniorage' charges are minting charges for converting bullion into coins.' Seigniorage is the profit made by the Government on the coining of money. Source : The Law Lexicon Compiled and edited by P. Ramanatha Aiyer Publishers : Wadhwa and Company, Nagpur The term, 'seigniorage' is used in Section 4 (1) of Kerala Grants and Leases Act, 1980 (16 of 1980) to highlight the prerogative of the State in relation to property belonging to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lessee or grantee but standing on State-owned land, Source : Supreme Court Words Phrases with Legal Maxims Judicially considered : Compiled by Surendra Malik and Sumeet Malik Publishers Eastern Book Company Lucknow. - Reply By DEVARA SIVAPRASAD - The Reply = with due respect to other expert Group, I would like to inform that Royalty and Seigniorage Fee/Charges are one and the same in the Subject Context. Either under MMDC Act,1957 or under Respective State MMC Rules, they both are used in the same Context. The only difference is that Royalty is being used in r/o Major Minerals under MMDC Act, 1957, whereas the Seigniorage Fee/Charges is being used in r/o Minor Minerals under respective state MMC Rules. Both Carries the same meaning are bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng used in the same Context and Trade also knows about it. Every word will be having so many synonyms and it is being used in various Occasions. If a meaning of one word defined in one Context in a dictionary doesn't restricts its ambit and scope to some Particular situation only. Even in a Statutory Definition, you might have observed that while defining the definitions Portion, it always preceded by the Condition Clauses like Unless the Context otherwise requires to ensure that the other Provisions in the Statute will not become redundant/absurd, if a situation arises for a definition has to be read in other sense. Hope I clarified in this Context also. - Reply By KASTURI SETHI - The Reply = Dear all, There is no dispute about the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licability of RCM in this scenario but literal meaning of both words differ. In my view, it is not nominal difference. Even marginal difference between the two terms cannot be ignored for all the purposes including the present situation. No need to clarify further inasmuch as it has already been explained above in detail on the basis of the legal dictionaries. - Reply By DEVARA SIVAPRASAD - The Reply = My Answer would remains the same. Any literal meaning has to be understood with the Context of the issue, in terms of Primary Rule of Rules of Interpretation as evolved by the Courts to derive out the Legislative intent/Spirit of the Legislature. In this situation, it doesn't make any difference either it is used with the Royalty/Seignior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age Fee or Charges. As said earlier, even Statuses are drafted keeping in view of these Rules of interpretation to avoid absurdity. - PAYMENT OF RCM ON SENIORAGE CHARGES - Query Started By: - gunda ashok kumar Dated:- 26-12-2024 Last Replied Date:- 27-12-2024 Goods and Services Tax - GST - Got 11 Replies - GST - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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