In re JSW Steel Ltd. (GST AAR Karnataka)
Whether the Applicant is liable to discharge GST under reverse charge, for the contribution made towards NMET and DMF, in light of Sl. No. 5 of the Notification No. 13/2017- Central Tax (Rate) dated 28.06.2017?
Government has provided the land on lease to the applicant to carry out the mining activity and in turn the applicant pays royalty along with the amounts paid to the District Mineral Foundation of the district and to the National Mineral Exploration Trust as specified by the Government. Applicant made these payments under the statutory requirements of the Mines and Minerals (Development and Regulation) Act, 1957. Here whether amount paid to the District Mineral Foundation of the district and to the National Mineral Exploration are to be included in the value of the service provided.
Both these payments are payable by a lessee in addition to the royalty and both the calculations are made on the basis of royalty.
As per 15(2)(a) of CGST Act, 2017 value of the taxable supply of service not only includes the amount of royalty paid to the Government but it also includes the amount paid to the District Mineral Foundation of the district and to the National Mineral Exploration Trust as these payments are made under the statutory requirements of the Mines and Minerals (Development and Regulation) Act, 1957 which is taxable under GST.
Section 9(3) of the GST Act,2017 says, 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 relation to the supply of such goods or services or both.
Pursuant to the above provision Government notified the categories of supply of services under the Notification No. 13/2017- Central Tax (Rate) dated 28.06.2017.
In the instant case it is clear that since the Government (Central/state) has provided the land to the applicant on lease to carry out the mining activity, the Government(Central/state) becomes the supplier of the service and the applicant (business entity) is the recipient of the service. Therefore, as per the Notification No. 13/2017- Central Tax (Rate) dated 28.06.2017 applicant is liable pay GST on the payment made to the District Mineral Foundation of the district and payment made to the National Mineral Exploration Trust on reverse charge basis.
The Applicant is liable to pay GST under reverse charge, for the payment made towards NMET and DMF, in light of Si. No. 5 of the Notification No. 13/2017- Central Tax (Rate) dated 28.06.2017.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, KARNATAKA
1. M/s. JSW Steel Ltd., (hereinafter referred to as “Applicant”), bearing GSTIN number 29AAACJ4323N1ZC filed an application for Advance Ruling under Section 97 of the CGST Act, 2017 and Section 97 of the KGST Act, 2017, in FORM GST ARA-01 by discharging the fee of Rs.5,000/- each under the CGST Act, 2017 and the KGST Act, 2017.
2. The applicant is a Public Ltd Company, registered under the Companies Act 1956. The Applicant is registered with GST authorities vide GSTIN 29AAACJ4323NIZC and has been regularly paying GST frabilities and filing GST returns.
3. The applicant is manufacturer of Iron as Steel Products viz., HRPO/HRSPO coils, CRFH/CRCA coils, CRCA sheets, HR plates and sheets, MS slabs, Cobbles, Galvanized Corrugated sheets, Pig Iron, Iron scrap, Steel scrap ends etc., falling under Chapter 72; Iron ore pellets, Pig iron etc., falling under Chapter 26. The Applicant has set up a large production facility for manufacture of Iron and steel products in the region of Toranagallu, Sandur taluk, Bellary Dist.
4. The applicant states that with the intent to fulfill the requirement of Iron ore for manufacture of Steel and Iron they had participated in auction for seven mines and based on the bidding, M/s JSW Steel Limited was given the lease area to the extent of 33.21 hectares for a period of 50 years for carrying out mining activities.
5. With regard to the levies made for the purpose of mining for extraction of the iron ore, the applicant pays Royalty to the government. The royalty amount, in light of Section 9 of the Mines and Minerals (Development and Regulation) Act, 1957, is equivalent to fifteen percent of average selling price of iron ore.
6. Further, the applicant states that, in addition to the royalty, he is paying an amount equivalent to ten percentage of the royalty to the District Mineral Foundation of the district in which the mining operations are carried out. This amount is paid in terms of Section 9B (5) of the Mines and Minerals (Development and Regulation) Act, 1957.
7. Apart from the above levies as per the provisions of Section 9C of the Mines and Minerals (Development and Regulation) Act, 1957, Central Government has established a National Mineral Exploration Trust, with an object to use the funds accrued to the Trust for the purposes of regional and detailed exploration in such manner as may be prescribed by the Central Government. The holder of a mining lease shall pay to National Mining Exploration Trust, a sum equivalent to two percent of the royalty paid in terms of the Second Schedule.
Accordingly, the applicant states that he has made statutory contributions into the above funds vide the following demand drafts, copy of the deposits are enclosed as under.
