Whether the applicant has to discharge GST on the total amount being collected by them from Virat Associate LLP, which incldes DMG Royalty, DMF and Owner’s Royalty, under forward charge mechanism or on Owner’s Royalty only? (The Applicant requested to permit them to withdraw the application filed for advance furling manually vide letter dated 23.11.2020)
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, KARNATAKA
1. M/s Alfa Granites (called as the ‘Applicant’ hereinafter), # 145, 2nd Floor, Kodihalli, Old Airport Road, HAL 2nd Stage P.O., Next to Victor Mansion Building, Bengaluru – 560 008, Karnataka, having GSTIN number 29AAVFA7448M1ZG, have filed an application for Advance Ruling under Section 97 of CGST Act,2017 8s KGST Act, 2017 read with Rule 104 of CGST Rules 2017 85 KGST Rules 2017, in form GST ARA-01 discharging the fee of Rs.5,000/- each under the CGST Act and the KGST Act.
2. The applicant is a registered partnership firm and are holders of Building Stone Quary Lease in Malur, Kolar District, Karnataka. They entered into Memorandum of Understanding (MOU) with Virat Associate LLP in accordance to which Virat Associate LLP shall extract and use the building stone by using its own men and machinery & in shall pay Rs.25/- per Metric Ton to the applicant as Owner’s Royalty along with 18% GST, under forward charge mechanism.
3. The applicant is also collecting DMG Royalty (Department of Mines 85 Geology Royalty) and District Mineral Fund (DMF) from Virat Associate LLP, in addition to the Owner’s Royalty. The applicant is discharging GST @ 18% on DMG Royalty 85 DMF under reverse charge mechanism, in terms of Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017. Further GST @ 18% is being discharged by the applicant on forward charge mechanism. In view of the above, applicant seeks advance ruling, with regard to determination of liability to pay tax, in respect of the following question:
Whether the applicant has to discharge GST on the total amount being collected by them from Virat Associate LLP, which includes DMG Royalty, DMF & Owner’s Royalty, under forward charge mechanism or on Owner’s Royalty only?
4. The applicant contends that they are liable to discharge GST @ 18% on the Owner’s Royalty Component only but not on the amounts collected towards DMG Royalty 85 DMF, as the GST on the said amounts is being discharged by them under Reverse Charge mechanism and hence it amounts to double taxation which is against the spirit of Law.
5. The applicant had been given an opportunity of hearing on 15.10.2020. Sri. Syed Nayaz Pasha, Finance Manager 86 Authorised Representative of the applicant attended the hearing 86 reiterated their contentions. However, the applicant vide their letter dated 23.11.2020, requested this authority to permit them to withdraw their application for advance ruling, quoting the reason that certain clauses of the MOU have been mended due to the ill effect of COVID-19 and consequential slow down of the business.
6. In view of the above, we pass the following
The application filed by the Applicant for advance ruling is disposed off as withdrawn.