GST Liability on Quarry Lease Royalties: AAR Karnataka withdraws ruling on application. Clarification on Owner's Royalty vs. all royalties.

The Authority for Advance Rulings, Karnataka, disposed of the application as withdrawn without ruling on the GST liability issue. The applicant, a partnership firm holding a Building Stone Quarry Lease, sought clarification on whether GST should apply to all royalties collected or only on Owner's Royalty. The applicant, after arguing against double taxation, withdrew the application due to COVID-19's impact on business operations, leading to amendments in the MOU with another entity for stone extraction.

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Issues:
1. Application for Advance Ruling under CGST and KGST Acts regarding GST liability on various royalties collected.

Analysis:
The applicant, a partnership firm holding a Building Stone Quarry Lease, entered into an MOU with another entity for stone extraction, agreeing on payment of Owner's Royalty along with GST. Additionally, the applicant collected DMG Royalty and DMF from the other entity, discharging GST under reverse charge mechanism as per Notification No.13/2017-Central Tax (Rate). The applicant sought clarification on whether GST should be paid on the total amount collected, including all royalties, or only on Owner's Royalty under forward charge mechanism. The applicant argued against double taxation, stating they should only pay GST on Owner's Royalty. After a hearing, the applicant withdrew the application due to amendments in the MOU caused by COVID-19's impact on business operations.

Therefore, the Authority for Advance Rulings, Karnataka, disposed of the application as withdrawn, without providing a ruling on the GST liability issue raised by the applicant.

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