Gst on upfront feed

[Bibhu Tripathy]

sir,

Whether GST on upfront fees paid on the lease of mines granted during March 2020 is payable.

with regards

[Mahir S]

The query is not complete as details of such upfront fees paid is required to be elaborated .

[Bibhu Tripathy]

mining lease has been granted to a person. Then as per the demand, Upfront fees has been paid. Whether such upfront fee is liable to GST .

[Mahir S]

The query is still not clear.

However, you may refer Board circular 101/20/2019 GST dated 30.04.2019, wherein GST exemption is granted to certain upfront fees.

Please check if the upfront fees paid by you are covered under the said Circular.

[Rajagopalan Ranganathan]

Sir,

The entry at S. No. 41 of Notification 12/2017-Central Tax (R), dated 28-6-2017 reads as under:-

“Upfront amount (called as premium, salami, cost, price, development charges or by any other name) payable in respect of service by way of granting of long-term lease (of thirty years, or more) of industrial plots or plots for development of infrastructure for financial business, provided by the State Government Industrial Development Corporations or Undertakings or by any other entity having 50 per cent. or more ownership of Central Government, State Government, Union territory to the industrial units or the developers in any industrial or financial business area.” (Heading 9972).

Lease of mines is not covered by the Notification Hence gst is payable on upfront charges.

[Bibhu Tripathy]

Thank you sir. It also appeared to me. Also pl.analyse notf. no. 12/17 gst rate sl.no. 64

[DR.MARIAPPAN GOVINDARAJAN]

I endorse the views of Shri Renganathan

[KASTURI SETHI]

Serial No.64 of Notification No.12/17-CT(Rate) dated 28.6.17 does not help as the exemption is conditional (tax payable on one time charge ) pertaining to the period before 1.4.16 i.e. right to use was assigned before 1.4.16

[Bibhu Tripathy]

Thank you Kastury sir. It imnates that GST is payable on Upfront fees. No there is no iota of doubt. Is it 18% or 5%

AI Summary

GST liability on upfront lease fees: upfront charges for mine leases attract GST unless covered by specific exemption.
Upfront charges for a mining lease are liable to GST because the exemption for upfront amounts covers long term industrial or infrastructure plot leases by specified government development entities and does not include lease of mines; a Board circular may exempt certain upfront fees and should be checked, while a referenced conditional notification provision addressing pre implementation assignments is inapplicable and the applicable GST rate on the upfront fee was not determined.