The Authority of Advance Ruling (AAR) ruled that ‘Licensing services for the right to use minerals including its exploration and evaluation’ is subjected to levy of Goods and Service Tax (GST) @ 5% till December 31, 2018, and thereafter @ 18% under reverse charge basis.
The applicant, M/s Cosme Costa and Sons, a partnership firm having their registered office at Goa is engaged in the business of extraction and sale of iron ore. The operations conducted in relation to the extraction include the activity of raising, excavating, stacking of iron ore and delivering the extracted crude iron ore at Pithead.
The applicant seeks Advance Ruling as to 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 SAC 9973 and what is the rate of GST applicable on the supply?
The authority is composed of members J.K. Meena and Sarita S. Gadgil ruled, “the royalty paid by M/s Cosme Costa & Sons in respect of mining lease is classifiable under subheading 997337- “Licensing services for the right to use minerals including its exploration and evaluation” and is subject to levy of GST @ 5% till 31.12.2018 and thereafter @ 18% under reverse charge basis.”
In this regard, the authority also held, “he contributions made to the District Mineral Foundation (DMF), the National Mineral Exploration Trust (NMET) and the Goa Mineral Ore Permanent Fund Trust (GMOPFT) are classifiable under subheading 997337- “Licensing services for the right to use minerals including its exploration and evaluation” and is subject to levy of GST @ 5% till 31.12.2018 and thereafter @ 18% under reverse charge basis.”
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