The lease holders are required to pay the GST under the reverse charge mechanism.
GST on Royalty —– The petitioner prayed for quashing letter dated 8/11/2017 issued by Finance (Tax) Department, Rajasthan government and for issuing a clarification to avoid, double burden on the miner/lease holder/end user and suitable amendment in law. The petitioners are in the business activity of mining and are registered lease holders. The respondent-State is empowered to award the Excess Royalty Collection Contract (ERCC) to the Royalty Contractors. The counsels for the petitioners submitted that the letter issued authorizes the contractor to collect the GST on the amount of royalty collected on behalf of the Government was against the provisions of Section 9 (3) of the Act, 2017 readwith notification No.13/2017 Central Tax (Rate) dated 28.06.2017. These contractors are the mining lease holders of natural resources without supply of such natural resources. The court observed that the letter of the Finance Department, Government of Rajasthan to Royalty Contractors became the bone of contention in these writ petitions, as the same entitled the contractor to collect GST @ 18% as forward charges. Further, once, the reverse charge mechanism itself has not been contested by the respondents and it is an accepted proposition, the court do not find any reason to make any further adjudication in the matter.
Held that:- The Hon’ble High Court allowed the petitions and quashed the letter dated 08.11.2017 issued by the Finance (Tax) Department, Government of Rajasthan.
The lease holders are required to pay the GST under the reverse charge mechanism.
GST on Royalty —– The petitioner prayed for quashing letter dated 8/11/2017 issued by Finance (Tax) Department, Rajasthan government and for issuing a clarification to avoid, double burden on the miner/lease holder/end user and suitable amendment in law. The petitioners are in the business activity of mining and are registered lease holders. The respondent-State is empowered to award the Excess Royalty Collection Contract (ERCC) to the Royalty Contractors. The counsels for the petitioners submitted that the letter issued authorizes the contractor to collect the GST on the amount of royalty collected on behalf of the Government was against the provisions of Section 9 (3) of the Act, 2017 readwith notification No.13/2017 Central Tax (Rate) dated 28.06.2017. These contractors are the mining lease holders of natural resources without supply of such natural resources. The court observed that the letter of the Finance Department, Government of Rajasthan to Royalty Contractors became the bone of contention in these writ petitions, as the same entitled the contractor to collect GST @ 18% as forward charges. Further, once, the reverse charge mechanism itself has not been contested by the respondents and it is an accepted proposition, the court do not find any reason to make any further adjudication in the matter.
Held that:- The Hon’ble High Court allowed the petitions and quashed the letter dated 08.11.2017 issued by the Finance (Tax) Department, Government of Rajasthan.