RCM on Royalty Payment to Government

[NARENDER YARRAGORLA]

We are paying Royalty to State government, whether RCM u/s 9(3) applicable on the payment?

[Shilpi Jain]

Dispute free view is to pay. However issue is pending before SC whether royalty is a tax or not.

So if you can take ITC, pay it. Else pay under protest, for a dispute free stand.

[KASTURI SETHI]

GST is payable on Royalty to Govt. under RCM. This is the present legal position. Payment of tax under protest is the best way to claim refund later on, in case Hon'b'e Supreme Court decides the case in favour of the assessees.

[V.m.v.subba rao]

Under GST system whether payment can be made under protest. If yes, under which section please

[KASTURI SETHI]

"Under Protest" is covered under Saving Section 174 of CGST Act and it saves Central Excise Act, Central Excise Rules and Finance Act, 1994 (Service Tax laws including Service Tax Rules for Central Govt. as well as assessees. See erstwhile Rule 233 B of Central Excise Rules, 1944. 'Under Protest' is an integral part of principles of natural justice.

[Himansu Sekhar]

In a FAQ released by Board for the Mining Sector, GST is leviable on Royalty. The case pending before Hon'ble Apex Court is to decide as to whether Royalty is a Tax or not. It will have no bearing during the GST period as per Sec. 15 of the CGST Act. The rate of Gst on Royalty has also been clarified by GST Council. Hence instead of contesting the Department GST on Royalty should bevdischarged.

AI Summary

Reverse charge on royalty payments to government: discharge GST under RCM or pay under protest if input credit unavailable
The central position is that GST is payable on royalty paid to a State government under the reverse charge mechanism, supported by GST Council rate clarification; pending Supreme Court consideration of whether royalty is a tax does not affect GST valuation, and taxpayers are advised to pay under protest when input tax credit cannot be claimed to preserve refund rights.