Reverse charge- In the instant case, the appellant has filed this appeal requesting advance ruling in respect of the following question:-
What is the Appellant's liability to pay tax on contributions made to District Mineral Foundation (DMF) and National Mineral Exploration Trust (NMET) as per Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act, 1957) ?
The Appellant NMDC Limited is a state-controlled mineral producer of the Government of India. It is owned by the Government of India and is under administrative control of the Ministry of Steel. It is India's largest iron ore producer and exporter producing millions of tons of iron ore from fully mechanized mines in Chhattisgarh.
the AAR has ruled that “the contribution made to the DMF and NMET by M/s. NMDC as per MMDR Act, 1957 are liable to GST under Reverse Charge Mechanism.”
The activities undertaken by the trusts are under the control of the District Administration and different Government departments entrusted to it by the State Government in respect of the DMF and the Central Government in respect of the NMET respectively.
Section 2(98) of CGST Act, 2017 stipulates regarding liability to pay tax under reverse charge, meaning therein that the liability to pay tax shall be on the recipient of goods/services rather than the supplier of goods/services.
Reverse Charge Mechanism is applicable for certain notified services as mentioned in Notification No, 13/2017 - Central Tax (Rate) dated 28,06.2017. As per SI. No. 5 to the said Notification, services supplied by the Central Government, State Government, Union territory or local authority to a business entity attracts GST under reverse charge basis by the recipient of such services. Thus, entry No. (5) of the said notification states that the services supplied by the Central Government/State Government to a business entity will come under Reverse Charge Mechanism.
Held that- there appears no merit in the appeal filed by the appellant & thus the ruling of the AAR, Chhattisgarh is upheld.