Mining Royalty Taxed at 18% Because It Is a Licensing Service: AAR Maharashtra

By CA Sandeep Kanoi Goods and Services Tax Judiciary February 7, 2026 1 comment

TaxGuru Citation: 2026 taxguru.in 1990
Case Name: In re Ramandeep Upkarsingh Bindra (Black Rock Crusher) (GST AAR Maharashtra)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Courts: Advance Rulings, Maharashtra AAR

Already Upgraded? Log in.

In re Ramandeep Upkarsingh Bindra (Black Rock Crusher) (GST AAR Maharashtra)

The Authority for Advance Ruling, Maharashtra examined the GST implications of royalty paid for mining leases. The applicant, a registered taxpayer engaged in mining and quarrying, obtained a mining lease from the State Government to explore and extract minerals such as black rock and stones, governed by the Maharashtra Minor Mineral Extraction (Development and Regulation) Rules, 2013. In consideration for the lease, the applicant paid royalty or dead rent to the State Government based on the quantity of minerals extracted.

Two questions were raised: first, whether leasing of mines with royalty charged by the Government is classifiable under Heading 9973, specifically sub-heading 997337 covering “licensing services for the right to use minerals including exploration and evaluation”; and second, whether such services could be classified under Entry 17(iii) of Notification No. 11/2017–Central Tax (Rate), thereby attracting the same GST rate as applicable to the supply of like goods (5%).

The applicant contended that royalty represents consideration for transfer of the right to use minerals and should therefore attract the same GST rate as the extracted goods. The jurisdictional officer, relying on statutory provisions, circulars, GST Council recommendations, and judicial precedents, argued that mining leases involve licensing rights rather than leasing of tangible goods and should be taxed at the standard GST rate.