Mining-related statutory contributions treated as part of consideration for government supply and included in GST value under reverse charge.

Compulsory contributions to the National Mineral Exploration Trust and the District Mineral Foundation under the mining law framework were treated as part of the composite consideration for the State Government's service of granting and continuing mining rights. The ruling found that the mining licence, royalty, and these statutory payments were not separate levies outside the supply transaction, but formed one arrangement for the right to extract minerals. As services supplied by a State Government to a business entity fall under reverse charge, the contributions were included in the taxable value of supply and became chargeable to GST in the hands of the recipient.

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Issues: Whether the contributions to the National Mineral Exploration Trust and the District Mineral Foundation under the mining law framework constitute consideration for supply of mining service by the State Government and are includible in the value of supply for GST under reverse charge.

Analysis: The statutory contributions were treated as compulsory payments linked to the grant and continuation of mining rights and not as independent, separable levies outside the supply transaction. The ruling proceeded on the basis that the mining licence, royalty, and the two statutory contributions formed part of one composite arrangement for the right to extract minerals, and that the amounts payable under these heads were all part of the total consideration for the service of granting mining and leasing rights. Since services supplied by the Central Government, State Government, or local authority to a business entity fall within the reverse charge mechanism, the compulsory contributions were held to enter the taxable value of supply.

Conclusion: The contributions to the National Mineral Exploration Trust and the District Mineral Foundation were held to be consideration for the mining service supplied by the Andhra Pradesh Government and were included in the value of supply chargeable to GST under reverse charge in the hands of the applicant.

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