GST LIABILITY ON AUCTION PREMIUM PAID TO STATE GOVERNMENT

[shradhananda padhi]

THE ASSESSEE ENGAGED IN THE BUSINESS OF MINING OPERATION AND TAKE THE MINING LEASE FROM STATE GOVERNMENT OF ODISHA ON AUCTION BASIS AND NOW THE ASSESSEE WILL MAKE AUCTION PREMIUM TO GOVERNMENT.

PLEASE SUGGEST IS THE ASSESSEE LIABLE TO PAY GST UNDER RCM.............

[ABHISHEK TRIPATHI]

Auction premium is the price that the successful bidder pays in addition to the original/base price to the government. For instance, let’s assume premium is 150%, then the successful bidder pays INR 1.5 for every INR 1 (maybe ton or anything else according to the licensing condition).

If that is the case as stated above, then Auction Premium is a part of the consideration payable for the Licensing services for right to use minerals including exploration and evaluation falling under Head 997337. [Refer Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017]

As 997337 is supplied by Odisha Government to the Assessee (Business Entity) then the liability to pay GST is on the assessee under RCM as envisaged by S.No. 5 of the Notification No. 13/2017- Central Tax (Rate) dated 28.06.2017.

[PRADIP MISHRA]

The mining company has to pay Royalty and GST on reverse charge for the services received from the Government .

Should they again be required to pay GST on premium amount for the same service?

This looks like collection of GST twice over .

AI Summary

Mining Company Queries GST Liability on Auction Premiums Under Reverse Charge Mechanism, Citing Notification No. 13/2017 A mining company in Odisha, which acquires mining leases through auctions, inquired about its GST liability on auction premiums paid to the state government. One respondent explained that the auction premium is part of the consideration for licensing services under Head 997337 and is subject to GST under the reverse charge mechanism (RCM) as per Notification No. 13/2017. Another respondent questioned whether GST should be paid again on the premium amount, suggesting this could result in double taxation.