Mining royalty-linked fund contributions held to form part of supply value and attract GST under reverse charge.

Contributions to the National Mineral Exploration Trust and District Mineral Foundation under the mining law framework were treated as part of the composite consideration for the mining licence because they are statutorily linked to the grant and enjoyment of mining rights, are compulsory, and are measured with reference to royalty. The AAR held that these payments do not create a separate supply and therefore fall within the statutory concept of consideration, making them includible in the value of supply. As the supply is by the Government to a business entity, GST applies under reverse charge.

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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 form part of the value of supply liable to GST under reverse charge.

Analysis: The contribution to the two funds is statutorily linked to the grant and enjoyment of mining rights and is payable as part of the composite consideration for the mining licence. The amount is compulsory, is measured with reference to royalty, and does not create a separate supply provider for royalty, NMET, and DMF. The levy therefore falls within the statutory concept of consideration and is includible in the value of supply. As the supply is by the Government to a business entity, the reverse charge mechanism is attracted under the relevant notification.

Conclusion: The issue is answered against the applicant and in favour of the Revenue: NMET and DMF contributions are consideration for mining service, form part of the value of supply, and are chargeable to GST under reverse charge in the hands of the applicant.

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