In re Amarjyoti Granites India Private Limited (GST AAR Odisha)
The Odisha Authority for Advance Ruling (AAR) rejected an application filed by a mining company seeking a ruling on whether GST paid under the Reverse Charge Mechanism (RCM) on mining royalty could be treated as refundable Input Tax Credit (ITC) under the inverted duty structure provisions of Section 54(3) of the CGST Act. The applicant also sought clarification on whether mining royalty, being a statutory payment intrinsically linked to mineral extraction, should be treated differently from ordinary input services for refund computation under Rule 89(5) of the CGST Rules.
The applicant submitted that it was engaged in mining, extraction and sale of granite blocks and was required to pay royalty to the Government under the Mines and Minerals (Development and Regulation) Act, 1957. GST on such royalty was payable under the Reverse Charge Mechanism. Since the GST rate on granite blocks was lower than the GST paid on inward supplies, including mining royalty, the applicant accumulated unutilized ITC due to an inverted duty structure. The applicant contended that denial of refund resulted in blockage of working capital and referred to judicial decisions concerning refund under inverted duty structure and the legal nature of mining royalty.
