Mining royalty classification: tax applies under mineral licensing services, with statutory fund contributions following the same treatment.

Royalty paid under a mining lease is not treated as leasing or renting of goods because the lease grants an interest in immovable property and the extraction right is a profit a prendre. It is taxable under the service entry for licensing services for the right to use minerals, including exploration and evaluation. Statutory contributions to the District Mineral Foundation and the National Mineral Exploration Trust, being linked to royalty and payable in addition to it, follow the same classification and tax treatment as royalty under that mineral licensing service entry.

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Issues: (i) Whether royalty paid in respect of a mining lease falls under leasing or renting of goods, or under licensing services for the right to use minerals including exploration and evaluation; (ii) Whether contributions made to the District Mineral Foundation and the National Mineral Exploration Trust are taxable at the same rate as royalty.

Issue (i): Whether royalty paid in respect of a mining lease falls under leasing or renting of goods, or under licensing services for the right to use minerals including exploration and evaluation.

Analysis: A mining lease confers an interest in immovable property and the right to extract minerals is a profit a prendre. Royalty is consideration for extraction of minerals and does not convert the transaction into leasing or renting of goods. The classification entry for leasing or renting of goods does not cover mining royalty. The appropriate service entry is the tariff item for licensing services for the right to use minerals including its exploration and evaluation.

Conclusion: Royalty paid under a mining lease is not classifiable as leasing or renting of goods and is taxable under the entry for licensing services for the right to use minerals including its exploration and evaluation.

Issue (ii): Whether contributions made to the District Mineral Foundation and the National Mineral Exploration Trust are taxable at the same rate as royalty.

Analysis: The contributions to the District Mineral Foundation and the National Mineral Exploration Trust are statutorily linked to the royalty payable under the mining regime and are payable in addition to royalty. Since these amounts are in the nature of consideration connected with the right to use minerals, they follow the same service classification and tax treatment as royalty.

Conclusion: The contributions to the District Mineral Foundation and the National Mineral Exploration Trust are taxable at the same rate as royalty under the same service entry.

Final Conclusion: The advance ruling answers both questions against the applicant and confirms taxability under the minerals licensing service entry rather than under the goods leasing entry.

Ratio Decidendi: Royalty and statutory mineral-fund contributions arising from a mining lease are consideration for the right to use minerals and are not consideration for leasing or renting of goods.

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