Supply of aggregates and royalty charges are separate supplies with different GST rates under HSN 251710 and SAC 997337

The AAR held that supply of aggregates and recovery of royalty charges constitute two separate supplies rather than mixed or composite supply. The applicant correctly collected tax separately on both components in tax invoices. Royalty charges fall under SAC 997337 attracting 9% CGST and 9% SGST totaling 18% GST. Supply of aggregates manufactured from boulders falls under HSN code 251710 attracting 2.5% CGST and 2.5% SGST totaling 5% GST.

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Issues: Classification of goods and services for consideration charged & Rate of GST on supplies

Classification of Goods and Services:
The case involved an application filed under the Central Goods & Services Tax Act and Andhra Pradesh Goods & Services Tax Act by a company engaged in manufacturing aggregates from boulders purchased from quarries. The applicant sought clarification on the classification of goods and services for supplying aggregates and recovering royalty charges. The applicant maintained that the supply of aggregates and recovery of royalty charges were separate and not a composite or mixed supply.

Rate of GST on Supplies:
The applicant issued tax invoices for royalty charges at 18% and for aggregate value at 5%. The issue was to determine the applicable rate of GST on these supplies as per specific notifications. The applicant collected tax on royalty charges and goods supplied separately, emphasizing the distinct nature of these transactions.

Discussion and Findings:
Upon examination, it was noted that the applicant treated royalty charges and aggregate supply as distinct transactions. Reference was made to Circular No. 164/20/2021-GST, clarifying the classification of services related to mining rights. It was concluded that royalty charges fell under SAC 997337, attracting 9% CGST and 9% SGST, while aggregates were classified under HSN code 251710, with CGST at 2.5% and SGST at 2.5%.

Ruling:
1. The royalty charges collected were classified under SAC 997337, and the supply of aggregates under HSN code 251710.
2. The rate of GST for royalty charges was determined at 9% CGST and 9% SGST, while aggregates attracted CGST at 2.5% and SGST at 2.5% as per specific notifications.

This comprehensive analysis addressed the issues of classification and GST rates, providing clarity on the tax treatment of royalty charges and aggregate supplies in the context of the Central and Andhra Pradesh GST Acts.

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