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.............

AI Summary

Reverse charge GST applies to auction premium as consideration for mining lease licensing services, raising double taxation concerns.
The auction premium payable by a mining lessee is treated as part of the consideration for licensing services for the right to use minerals, and where those services are supplied by the Government to a business lessee the GST liability is on the lessee under the reverse charge mechanism; the discussion also flags a concern that this approach may duplicate tax already paid as royalty.