Mining-right contributions linked to lease rights are taxable as services and attract GST under reverse charge.

Amounts statutorily payable by a mining lease holder to the District Mineral Foundation and the National Mineral Exploration Trust, in addition to royalty, were treated as linked to the grant and enjoyment of mining rights rather than as independent exactions. On that basis, the AAAR held that the activity constitutes a taxable supply of services and that, where the reverse charge notification applies to a business entity, GST is payable by the recipient under reverse charge. The contributions were therefore held taxable under GST and the appellant was liable to discharge the tax.

---

---

Issues: Whether the contributions payable to the District Mineral Foundation and the National Mineral Exploration Trust under the mining law are liable to GST under reverse charge as amounts forming part of the royalty-linked consideration for the mining rights.

Analysis: The authority noted that the impugned contributions are statutorily payable by the holder of a mining lease in addition to royalty and arise only because the mining rights are granted under the mining legislation. It accepted the view that the amounts are not independent exactions divorced from the mining lease, but are linked to the grant and enjoyment of mining rights. The authority also proceeded on the basis that the activity falls within the definition of supply and is treated as a supply of services, and that the appellant, being a business entity, is covered by the reverse charge notification applicable to such services.

Conclusion: The contributions to the District Mineral Foundation and the National Mineral Exploration Trust are taxable under GST and the appellant is liable to pay GST under reverse charge.

Ratio Decidendi: Amounts statutorily payable in addition to royalty for the grant and enjoyment of mining rights form part of the taxable supply of licensing services and attract GST under reverse charge where the applicable notification so provides.

---