In re Andru Srinivas (GST AAR Andhra Pradesh)
Question: Whether in the facts and circumstances the contributions to National Mineral Exploration Trust (NMET) and District Mineral Foundation (DMF) under the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR) read with National Mineral Exploration Trust Rules, 2015 (‘NMETR’) and Mines and Minerals (Contribution to District Mineral Foundation) Rules, 2015 (‘MMCDMFR’) would qualify as consideration towards supply of mining service by Andhra Pradesh Government and consequently included for purpose of value of supply chargeable to GS-I under the Reverse Charge Mechanism in the hands of the applicant service recipient.
Answer: The contributions to National Mineral Exploration Trust (NMET) and District Mineral Foundation (DMF) qualify as consideration towards supply of mining service by Andhra Pradesh Government and they being includible under value of supply, are chargeable to GST under the Reverse Charge Mechanism in the hands of the applicant, i.e., service recipient.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, ANDHRA PRADESH
1. At the outset we would like to make it clear that the provisions of CGST Act, 2017 and SGST Act, 2017 are in pari materia and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the APGST Act.
2. The present application has been filed u/s 97 of the Central Goods & Services Tax Act, 2017 and AP Goods & Services Tax Act, 2017 (hereinafter referred to CGST Act and APGST Act respectively) by M/s. Andru Srinivas, Rajahmundry, East Godavari District, Andhra Pradesh (hereinafter referred to as applicant), registered under the AP Goods & Services Tax Act, 2017.
3. Brief Facts of the case:
1. Mr. Andru Srinivas (Andru), an individual proprietor and a mining lease holder was granted mining lease rights for “LATERITE” mineral by Government of Andhra Pradesh vide G.O. Ms. No. 63 dated 24.07.2013 over an extent of 10 hectares of land of Reserve Forest in East Godavari District.
2. On reclassification of Laterite from Major to Minor Mineral, the government has announced fixed Royalty (seigniorage fee) for Laterite vide G.O. M.S No. 105 dated 13.11.2015. The rate of Royalty is Rs. 75/- M.T for non -metal Grade and 150/- M.T for Metal Grade.
3. The Central Government as per section 9(c) of the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR) read with National Mineral Exploration Trust Rules, 2015 (‘NMETR’) has notified the establishment of a trust as a non-profit body to be called the National Mineral Exploration Trust (NMET), for which the mining lease holder shall pay a sum equivalent to two percent of the royalty paid in terms of the second schedule in such manner as prescribed by the Central Government.
4. The Government of Andhra Pradesh (GoAP) has notified establishment of District Mineral Foundations (DMF), vide G.O M.S. No 36 dated 14.03.2016, which shall collect 30% of royalty in this case, 1.0% in some other cases and also voluntary contributions, to fund the activities specified in the said G.O and these are in the nature of social welfare activities. 1 he payments towards DMF are paid to GoAP (Mining & Geology Department) through online payment on their website.
4. Questions raised before the authority:
Whether in the facts and circumstances the contributions to National Mineral Exploration Trust (NMET) and District Mineral Foundation (DMF) under the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR) read with National Mineral Exploration Trust: Rules, 2015 (‘NMETR’) and Mines and Minerals (Contribution to District Mineral Foundation) Rules, 2015 (‘MMCDMFR’) would qualify as consideration towards supply of mining service by Andhra Pradesh Government and consequently included for purpose of value of supply chargeable to GST under the Reverse Charge Mechanism in the hands of the applicant service recipient?
On Verification of basic information of the applicant, it is observed that the applicant falls under State jurisdiction, i.e. Assistant Commissioner (ST), Aryapuram Circle, Kakinada Division. Accordingly, the application has been forwarded to the jurisdictional officer and a copy marked to the Central Tax authorities to offer their remarks as per the Sec. 98(1) of CGST /APGST Act 2017.
In response, remarks are received from the jurisdictional officers concerned stating that no proceedings are lying pending or passed relating to the applicant on the issue, for which the Advance Ruling sought by the applicant.
5. Applicant’s Interpretation of Law and Facts:
