In re M/s. NMDC Limited (GST AAR Madhya Pradesh)
In respect of the first question raised by the Applicant regarding the classification of service by way of granting of license to extract minerals, we rule that the said service shall be classified under Tariff Heading 99733.
In respect of the second question raised by the Applicant regarding the taxability or otherwise of the additional contributions made to DMF and NMET, we rule that the said contributions are nothing but additions to the royalty payable for the original supply itself, and is therefore liable to be added to the value of the original supply and treated accordingly for the purposes of GST.
Read Also AAAR: GST payable under RCM on contributions to DMF & NMET: AAAR
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, MADHYA PRADESH
PROCEEDINGS
(Under sub-section (4) of Section 98 of Central Goods and Service Tax Act, 2017 and the Madhya Pradesh Goods & Service Tax Act, 2017)
1. The present application has been filed u/s 97 of the Central Goods & Services Tax Act, 2017 and MP Goods & Services Tax Act, 2017 (hereinafter also referred to CGST Act and MPSGT Act respectively) by M/s. NMDC Limited (hereinafter referred to as the Applicant), registered under the Goods & Services Tax.
2. The provisions of the CGST Act and MPGST Act are identical, except for certain provisions. Therefore, unless a specific mention of the dissimilar provision is made, a reference to the CGST Act would also mean a reference to the same provision under the MPGST Act. Further, henceforth, for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST or MP GST Act would be mentioned as being under the GST Act.
3. BRIEF FACTS OF THE CASE:
3.1 M/s. NMDC Limited (hereinafter referred to as ‘the Applicant’), having their registered office at NMDC Limited, Majhgawan, Diamond Mining Project, 488001 and are registered with the GSTN holding GSTIN 23AAACN7325A2Z2.
3.2 The Applicant is engaged in mining and sale of “rough diamonds”.
3.3 Thus the Applicant have approached the Authority for limited and specific ruling about clarification on classification of royalty payments to Government in respect of Mining lease under “Licensing services for Right to use minerals falling under the heading 9973″and determination of the liability to pay tax on contributions made to District Mineral Foundation (DMF) and National Mineral Exploration trust (NMET) as per MMDR Act, 1957.
4. QUESTIONS RAISED BEFORE THE AUTHORITHY:-
The following questions have been posted before the Authority:-
4.1. Whether royalty paid in respect of Mining Lease can be classified under “Licensing services for the right to use minerals including its exploration and evaluation falling under the heading 9973 attracting GST at the same rate of tax as applicable on supply of like goods involving transfer of title in goods”?
4.2. Determination of the liability to pay tax on contributions made to District Mineral Foundation (DMF) and National Mineral Exploration trust (NMET) as per MMDR Act, 1957.
5. RECORD OF PERSONAL HEARING:
Shree Ananthanarayanan S Counsel of the applicant for personal hearing and he reiterated the submissions already made in the application and attached submission. The Applicant argued the case as following-
5.1 “Background of operations –
NMDC Limited is a state-controlled mineral producer of the Government of India. It is owned by the Government of India and is under administrative control of the Ministry of Steel.
5.2 It is India’s largest iron ore producer and exporter producing about 30 million tons of iron ore from 3 fully mechanised mines in Chhattisgarh and Karnataka.
5.3 NMDC Ltd. also has Diamond Mining Project at Majhagawan, Panna (M.P) (hereinafter referred to as “NMDC” or “the Company” or “the Applicant”) which is engaged in mining and sale of “rough diamonds” falling under Chapter Heading 7201 attracting GST Rate of 0.25%.
Operating Mines of NMDC includes the following –
I) Bailadila Iron Ore Mine, Kirandul Complex, Distt. South Bastar, Dantewada (Chhattisgarh)
II) Bailadila Iron Ore Mine, Bacheli Complex, Distt. South Bastar, Dantewada (Chhattisgarh)
III) Donimalai Iron Ore Mine, Donimalai, Distt. Bellary (Karnataka)
IV) Diamond Mining Project, Majhgawan, Panna (Madhya Pradesh)
5.4 Payment of Royalty, DMF and NMET –
I) The question raised above for which the Advance ruling is sought is in relation to Diamond Mining Project, Majhgawan, Panna of NMDC.
